Advocating for Best Practices

VAT and Excise Taxes

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The U.A.E. implemented a value-added tax (VAT) in January 2018 in coordination with other GCC countries. Designed to generate additional revenue for high-quality public services and reduce dependence on oil, the VAT supports the U.A.E.’s long-term vision for economic divsersification.

The U.A.E. introduced an excise tax around the same time. Levied on specific goods including carbonated drinks, energy drinks, and tobacco and tobacco products and devices, the excise tax encourages U.A.E. consumers to make healthier life choices. Beginning in December 2019, these excise taxes were extended to electronic smoking devices, tools and liquids used in such devices, and sweetened drinks.

The U.S.-U.A.E. Business Council has played an important role in generating dialogue among public and private sector stakeholders on the development, introduction, and implementation of VAT and excise taxes.

As these taxes were first being formulated, the Business Council leveraged its relationships and expertise to advocate for measures that achieved the desired objectives of U.A.E. government authorities while causing minimal disruption to U.S. and U.A.E. companies. Working with government stakeholders and member companies, the Business Council organized forums where participants could discuss experiences of similar measures in other markets, lessons learned, and resultant best practices. Similarly, the Business Council privately engaged public and private sector stakeholders in countless conversations on these taxes.

At the same time, the Business Council sought to share important information about these developments with its members and the wider business community. In this regard, the Business Council supported the U.A.E. Ministry of Finance by advertising a series of informational seminars throughout the U.A.E. for businesses, and published informational reports ahead of the implementation of these taxes including a Council Report on preparing for VAT and excise taxes, and a VAT Primer. The Council was also outspoken about VAT and excise taxes in the press.

Now that these taxes have been implemented, the Council continues to provide forums for industry to provide feedback on their intended and unintended consequences, helping U.A.E. authorities further refine these ever-evolving measures for the benefit of all.