The United Arab Emirates is one of the biggest economies in the world, leading on many fronts. Its primary economy frontline is oil, like most of the other countries in the Middle East, but it has a better and fair share of foreign investors with relevance. The reason why the UAE is such a prosperous country amidst all its neighbors is political stability. The Middle East has been witnessing problems in all aspects for decades. These issues have not done well for the economy. UAE's political stronghold and governance have done them the favors otherwise.
Their financial structure is a minutely carved and constantly upgrading one. The design is a complete surprise package that comes with the icing: no federal income tax. However, this is no reason to start jumping in ecstasy. There are other taxes levied by the UAE government on individuals or firms who do business there. VAT, Excise tax is applicable to multiple products depending on their relevance in the regional and international markets. The taxes are arranged in an order that the benefit of individuals and the government are in nexus. Therefore, most international firms opt to trade with UAE rather than countries with similar demographics in the Middle East.
Excise tax is fairly new in the financial system of the nation. The definition of excise goods is different for different nations and for UAE, "any item that can directly or indirectly affect consumer health", is applicable for excise tax. The rates of excise tax have been revised in the year 2019, bearing a 100% tax levy on tobacco, alcohol, electronic smoking devices, energy drinks, and a few other products. Even 50% is applicable on carbonated drinks which may be an eye-catcher.
Value Added Tax:
This 2018-inclusive tax is similar to what most countries collect as finance for public service. VAT in UAE is charged 5% and applicable to an array of services. Luxury, activities that use public resources, as well as transportation, come under the VAT banner. If you are planning an overseas trip on a cruise liner or a business-class seat, prepare yourself for a 5% taxation. It is also applicable to different educational or healthcare services. The Federal Tax Authority and Ministry of Finance in UAE have also arranged for VAT refunds for tourists where they can submit all invoices of transactions done during their stay. After verification, the refund will be issued by the FTA. This is indeed a beneficial step to promote and enhance tourists with a statement: welcome.
UAE's Tax Policies With Foreign Lands
The foreign policies regarding taxations are similar to their locals. No federal tax is charged from earning citizens in the country, whether they are foreign or local. However, UAE has double tax treaties with multiple countries in the world whose individuals are present in thousands in the UAE. These tax treaties are an understatement to the fact that the earning individual needs to abide by taxation norms in their own country, even if there is no applicable taxation in UAE.
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