Dubai- President Shaikh Khalifa Bin Zayed Al Nahyan issued on Sunday a federal decree-law for value-added tax in preparation for the introduction of VAT as of January 1, 2018.

The new law is the “bedrock of the UAE’s planned tax system, which was designed to meet the most stringent of standards and best practices”, said Sheikh Hamdan bin Rashid Al Maktoum, deputy ruler of Dubai, UAE Minister of Finance and chairman of the Federal Tax Authority (FTA).

VAT is set to be implemented across the GCC depending on the readiness of each member state between January 1, 2018, and January 1, 2019, under the common VAT agreement.

“The new tax system will provide extra support for the government to implement the vision of the UAE leadership and build a diversified and productive knowledge economy,” he added.

“The tax will have positive results on the economy given that revenues will be redistributed to development projects that benefit society at large and accelerate progress until the UAE reaches the top of global rankings across all sectors,” added Sheikh Hamdan.

The decree-law made two exceptions as to what constitutes a supply: the issuance or sale of any voucher unless the received consideration exceeds its declared monetary value; and the transfer of whole or an independent part of a business from a person to a taxable person for the purposes of continuing such business that was transferred.