The United Arab Emirates’ Federal Tax Authority has announced a 100% tax on tobacco products and energy drinks, including a 50% tax on carbonated beverages. The new tax order will be implemented from the fourth quarter of this year.

The announcement comes after the first meeting of the UAE Federal Tax Authority board in Dubai, presided over by Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance.

The (VAT) valued added tax will be imposed on imported goods and services unless an explicit text in the law stipulates a 0% or exemption from paying the taxes, including foods, commercial buildings and hotel services. According to the law, an imported commodity or service could be subject to VAT by 5% or exemption from the tax.

Businesses that deal in international transportation, health and education services, commodities and exports and investment gold are exempted from taxes, as are residential buildings for sale or lease during the initial three years in which a building is finished, as well as certain financial services.

All businesses that import any commodity or services must register for the tax if their total imports - that are subject to VAT - exceed the obligatory registration limit, which is Dhiram 375,000.

For businesses with an annual income of Dhiram 187,000 or more the registration is optional.

Businesses, which import or supply goods or other services that are exempted from VAT need not register. This also applies to businesses that import commodities or services that are not subject to the VAT.

The tax order will come into force from January 1, 2018.

The Federal Tax Authority will open the registration door to businesses, whose tax subjected imports exceed the obligatory registration limit, in the first quarter of 2017.

Additionally, during the board meeting Obaid bin Humaid Al Tayer, Minister of State for Financial Affairs, was named as chairman of the FTA board.

AMandeep