Preparing for VAT and Excise Taxes in the U.A.E.
After years of discussion, the Gulf Cooperation Council (GCC) now appears close to finalizing Value Added Tax (VAT) and Excise Tax treaties. Driven by persistently low oil prices, GCC states have reportedly been discussing the prospect of a 5% VAT as well as Excise Taxes as high as 100% on certain goods, such as tobacco. Such discussions could culminate in the signing of formal treaties as soon as the end of the year. These treaties, in turn, could then lead to the implementation of national-level Excise Tax legislation as soon as January 2017 and national-level VATs as early as January 2018. Should these taxes be implemented, they would potentially both dampen profits and raise compliance challenges for many companies operating in the U.A.E., while also offering opportunities to select others. Many Business Council member companies have been in direct contact with the U.A.E. government and have worked through the Council to minimize some of the most negative components to businesses of these taxes.
