VAT is expected to be introduced throughout the UAE on January 1, 2018. The Kingdom of Saudi Arabia and the UAE will become the first two member states of the Gulf Cooperation Council to implement value-added tax. Other member states such as Bahrain, Oman, Qatar and Kuwait are expected to implement VAT in mid-2018 or early 2019.

The UAE will impose a standard tax rate of 5% on the supply of goods and services. However, certain supplies, such as local passenger transportation, designated financial services, medical care, exports outside the Gulf Cooperation Council, etc., will be zero-rated or exempt from VAT in the UAE.

Only when the VAT “implementation regulations” are issued, can we clearly understand the conditions and controls for exemption of supplies mentioned in the UAE VAT Law.