UAE to Implement Selective Tax Law from October 1

VAT Refunds - UAE - Tourists - Taxscan

The United Arab Emirates (UAE) is all set to implement selective tax law from 1st October 2017, confirmed by Younis Haji Al Khouri, Under Secretary at the Ministry of Finance in a statement to the Emirates News Agency.

The statement said that the selective tax will be imposed on selective goods that are consumed inside the country, even if they are in a free zone or at airports.

The selective tax is an indirect tax borne by the final consumer that is imposed on goods that are harmful to public health, environment or luxury goods in varying proportions and according to the executive regulations.

According to preliminary estimates, revenues expected to apply the selective tax on the federal budget will reach Dh7 billion annually.

Goods that are accompanied by travellers out of the country will not be taxed, but goods that travellers bring with them into the country will be taxed, he said.

He made the remarks following the promulgation of Federal Law No. 7 of 2017, which would impose selective taxation on activities related to selective goods, which include the production and import of selective commodities in the country if such activities are part of the course of doing business.

Al Khoury further said that the selective tax on tobacco and its derivatives and energy drinks will be imposed at 100 per cent and on soft drinks by 50 per cent, stressing that there are no lists of other commodities at present, which will be covered by the tax.

According to the law issued on Monday, the Council of Ministers, on the proposal of the Minister of Finance, determine the tax rates imposed on selective goods and how to calculate the selective price, provided that the tax rate imposed on such goods does not exceed 200 per cent of the selective price.

The ministry of finance is to submit to the council of ministers the executive regulations of the legislative decree for approval. The procedures, rules and conditions of tax registration and its cancellation, refusal of applications for tax registration, cancellation requests and the date of calculation of the tax specified at the date of import of selective goods or the date on which selective goods are obtained by the person. In case of selective goods before the effective date of the decree, the date of calculating the tax shall be the date on which the decree-law and other mechanisms pertaining to this type of tax shall apply.

taxscan-loader