The Ministry of Finance (MoF) has confirmed that the UAE has been conducting a series of studies on the implementation of a draft VAT law, along with the other GCC countries.
This is based on a previous agreement between the UAE and all GCC states to impose a VAT tax law simultaneously.
The draft law is still pending and under negotiation due to the absence of a final agreement between GCC countries on the tax rate and a list of tax exemptions.
The MoF has conducted several feasibility studies on taxation and its social and economic implications, the latest being in 2014, which was completed in early 2015.
The studies will determine the impact of taxes on the growth of the regional economy and UAE’s global competitiveness.
An announcement will be made once a final agreement on imposing a VAT law is reached.
Concerned sectors and entities will have around 18 months after the enactment of the law to implement and fulfill the requirements of their tax obligations.
This timeframe was set due to the UAE’s previous approval of the draft VAT law framework, to be applied on a GCC level.
The MoF, in coordination with the UAE’s local entities, has prepared draft laws on creating a federal tax authority, a draft law for tax procedures and a draft law for VAT, which include the components agreed upon in the GCC draft law.
These draft laws are still being studied to ensure their alignment to the country’s specifications and procedures.
With regards to corporate tax law, the ministry conducted a number of studies on the effects of imposing taxes in the UAE and presented it to relevant authorities.
The draft law is still under study with regards to the tax rate to be imposed.
The developments on the draft law on corporate tax will be announced once completed to allow concerned entities a time limit of no less than a year to fully prepare for the implementation and fulfillment of their tax obligations, after the approval and issuance of the law.