Month: January 2024

Introduction
In 2018,the United Arab Emirates (UAE) took a significant leap in economic policy by introducing the Value Added Tax (VAT) system. VAT Landscape  is marked a paradigm shift in the country's fiscal framework and had a profound impact on businesses and consumers alike. In this blog post, we will explore the key aspects of UAE VAT, its implications, and how businesses and individuals can navigate this taxation landscape.
What is Value added Means ?

Understanding UAE VAT:VAT Landscape Value Added Tax is a consumption tax levied on the value added to goods and services at each stage of the supply chain. In the UAE, VAT is currently set at 5%, a relatively moderate rate compared to many other countries. The implementation of VAT aimed to diversify revenue sources and reduce the dependency on oil-related income, contributing to the overall economic stability of the region.

In the UAE, the government recently changed how taxes work for businesses. This landmark decision marks the country’s first initiative into corporate taxation. Also, it aligns with international standards and promotes fiscal sustainability. This change follows global standards and helps the country manage its finances better. Moreover, this new framework differentiates businesses operating on the mainland from those established with designed free zones. Free zone entities and qualifying free zone persons are subject to a corporate tax rate of either 0% or 9% within the designated free zone.

 The Free Zone Corporate Tax system is meant to be applicable solely to the income generated from activities conducted exclusively within or from a Free Zone. This is clarified in the definition of 'Qualifying Income,' which encompasses earnings from transactions with other Free Zone entities, along with income from both local and foreign sources arising from the performance of any of the specified 'Qualifying Activities' outlined in the corresponding Ministerial Decision.

To sum it up, the approved 'Qualifying Activities' comprise the production of goods or materials, the processing of goods or materials, holding shares and other securities, owning, managing, and operating ships, providing reinsurance services, offering fund management services under the regulatory oversight of the competent authority in the UAE, and delivering wealth and investment management services under the regulatory oversight of the competent authority in the Qualifying Free Zone Person: