As per the draft Federal Decree-Law No 8 on Value-Added Tax, released by the UAE Government on Sunday, air travel, tuition fee and doctors’ fees are exempted from taxation under the new VAT regime, which is supposed to be rolled out on next January.
The value-added tax law prepared by the country contains one of the lowest rates in the world.
The UAE will implement five per cent VAT on goods and services from January 2018 as part of a GCC-wide agreement. “Very important to the wider public is the subjecting of the education and healthcare sectors to zero rate. Tuition fees will, therefore, not increase. The same holds for preventive and basic healthcare,” said Thomas Vanhee, founding partner, Aurifer Middle East Tax.
However, extracurricular activities such as sports classes, music lessons or school transport will be subject to VAT.
Air transport of passengers and goods which starts or ends in the state or passes through its territory, including related services, have been categorised as zero-rate d under the law.
The UAE is home to more than eight million expatriates from over 200 nationalities who fly regularly to their home countries in addition to travelling to other destinations of tourism.
Dubai International Airport received 43 million passengers in the first half of 2017, an increase of 6.3 per cent. In addition, a record 8.06 million international overnight tourists arrived in Dubai during the first six months of 2017, a 10.6 per cent increase over the same period last year.
The new VAT legislation also prohibits anyone having business in the UAE not to have more than one tax registration number (TRN).
