One of the most desirable benefits of starting up a business in the UAE is its extremely low tax environment. There are no personal taxes all around the UAE and no corporate taxes for all operating ones within the country.
It was just recently that The UAE established its Federal Tax Authority, in 2016 to be exact, with the aim of enhancing the economic stability, decreasing the dependency on oil income and increasing the non-oil returns.
One form of taxes in the UAE is excise tax, which is indirectly applied on specific goods, that are considered to be harmful to its consumers health or to the environment in general, such as Tobaccos, and the main reason of applying this tax is to help reducing importing it, besides the benefits of spending the collected money on improving the provided services to the public.
Another form of the most recent tax laws is VAT, which was introduced in 2018, and applies on some operating mainland and free zone companies, while offshore companies are exempted from VAT registration.
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VAT is only a 5% tax, that is applied on all made transactions of goods and services. Tax exemption may apply on some good and services, such as; services and goods related to non-cosmetic surgeries, rescue and assistance, precious metals, certain health care services, and certain education related goods and services.
VAT registration can be mandatory or optional, depending on the mandatory registration limit. After being registered, the tax submission can be done quarterly or monthly, depending on the size of your business, through the Federal Tax Authority online portal.
An ongoing process of developments and improvements is always on, and whether you overpaid your VAT taxes and want to reclaim the extra amount back, or underpaid it and want to make it right, you can always do it through an easy process.
Even after applying the terms of the signed treaty to introduce VAT, UAE has issued its own legislations and rules that best benefit the investors, the consumers and the country, along with designing a comprehensive system and clear processes.
Many countries around the world have been applying VAT for years, some introduced it in different forms, but with the same concept, and even after applying it, the UAE is still considered one of the lowest tax environments around the world.
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