New Tax on Certain Beverages and Tobacco

Updated on Saturday 10th June 2017

New Tax on Certain Beverages and Tobacco Image
Although certain products and services are exempt from the value added tax which will enter into force next year, the tobacco and some particular beverages will not be relieved from taxation. According to the Federal Tax Authority in Dubai, the tax will be applied in the last quarter of this year. Complete information about the taxation system in the UAE can be obtained from our accountants in Dubai who can also offer financial consultancy for every businessman who wants to start the activities in the Emirates.

Taxes to attain the economic diversification in the UAE

The energy drinks and the carbonated beverages will be taxed at a 50% rate, compared to the tobacco products which are going to be levied at a 100% tax rate. Numerous companies and suppliers consider that the VAT should not be introduced on the prices of the products, but they should deal with it at the end of the fiscal year. According to the financial authorities in the UAE, the VAT on certain goods and services will be set at a 5% rate, preparing the country for the post-oil era. Even though the new taxes will be implemented next year in January, the law in this matter will soon enter for final debates and approval. The important part is that some kind of beverages and also tobacco products will be taxed at higher rates compared to the taxes applied to other goods. We remind that you can receive details about the taxation for companies from our Dubai accountants. Our team can also provide you with audits in Dubai, if you have a small or a large company in the city.

Who is exempt from VAT in Dubai starting next year?

Before implementing the VAT, the financial authorities in the Emirates have planned and organized numerous workshops and presentations which targeted the business area in the country which needs to understand the new tax procedures. As for the goods and services which are going to be exempt from the VAT, the gold imported for investment, the international transportation, the health system, the education, exports and commodities are on the list. The same is available for the residential buildings for sale or rent in Dubai, alongside with particular financial services. 

Who will pay the VAT in Dubai next year?

Companies with profits starting with $100,000 should already register for VAT. It is good to know that businesses with zero rated goods and services can recover the VAT from the government of the Emirates.

Please contact our accounting firm in Dubai for further information about the new taxes which are going to the mandatory starting next year.