Page 34 - Focus Group

Paradigm Shift from

Tax Free to Tax Regime

The United Arab Emirates (UAE) has now entered tourist destination- the restaurants, hotels, hotel
into an era of taxes in order to diversify the apartments, resorts etc. might charge taxes on the
country’s revenue. There were taxes earlier that room rate, service charge, municipality fees, city
the commoners were not aware of, but now it is tax (ranging from 6 to 10 per cent) & tourism fee to
recognized by everybody and we anticipate more tourists entering the UAE.
tax plans on its way in the country.
Customs Duty: Customs duty is applicable for
With the introduction of VAT in the UAE many products which are imported into the UAE at
in the year 2018, every single resident has a standardized rate of 5% for most of the products.

been enlightened about tax in the region. While some products are exempted, the rates for
Was there tax before that? Yes of course, some products are reduced too.
there was corporate tax in the UAE which Excise Tax: A new rate of Excise taxes was
is applicable to oil sectors and foreign introduced towards the end of year in 2017
banks only. This tax system has been applicable to Tobacco products – 100%,
there for many years since 1960s. carbonated drinks - 50%, energy drinks
-100%. In progression, the categories
There is no personal income tax in the county and were increased in 2019 on electronic
the practice is unlikely to remain unchanged in the smoking devices- 100%, liquids used
future. Some of the other tax system in the UAE are
the following. in such devices and tools – 100% & on
any product with added sugar or other
Taxes for tourist in the UAE: UAE is an ideal
sweeteners – 50%.

34 TAX JOURNAL 2020 The Institute of Chartered Accountants of India (Dubai) Chapter NPIO