All food set to be taxed under VAT in UAE

All types of food in the UAE, including staples such as bread and rice, will be taxed from January 1, 2018, the Federal Tax Authority (FTA) told Gulf News on Wednesday morning.

The public has long-expected certain food staples to be zero-rated, or exempt, from the 5 per cent tax increase.

Zero-rated refers to the preferential status the government gives some essential goods and services, meaning their sale is not taxed.

Director-General of the FTA, Khalid Al Bustani, told Gulf News at a media event on Wednesday: “The law in the GCC agreement said that any food items would be under the sovereign right of the government to include it [as a zero-rated item]. The law that has been issued did not include it.”

The list Al Bustani referred to was issued at the end of August, and included goods and services such as public transport, commercial airlines, investment-grade precious metals, the supply of crude and natural gas, and education and health care.

Despite previous government comments that essential foods would be exempted, the FTA has confirmed that all foods will be taxed.

The public has long-expected certain food staples to be zero-rated, or exempt, from the 5 per cent tax increase, but that is not the case now and all the food items will be taxed.

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