Host
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Host
On Drive Live, it’s nice to see Ludmila Yamalova hiding behind a screen. I have to cut a peer around it.
Ludmila Yamalova
I’ve shrunk.
Host
Thanks.
Ludmila Yamalova
Great to be back.
Host
You’ve made me shrink. You’ve lowered my seat all the way to the floor—a feeling of power.
Ludmila Yamalova
Yes, I know you like to look down on me.
Host
Good to have you here. I wanted to start today with excise tax because we just had details through from the UAE Ministry of Finance. The press release is from His Highness Sheikh Hamdan Bin Rashid Al Maktoum. According to him, the new law will help us build a healthier and safer society. The tax is set to discourage the consumption of products that negatively impact the environment and, more importantly, people’s health.
Now, the focus here is on cigarettes, soft drinks, and energy drinks.
Ludmila Yamalova
Yes, and fast foods.
Host
Fast foods as well! Okay, so more than a triangle. What’s the law? Any surprises here?
Ludmila Yamalova
Not at all. It was not a surprising move. The excise tax has been announced a while back along with the VAT, if not even earlier. We just have not seen the law itself memorializing exactly how it’s going to look.
If you compare this to other jurisdictions, excise tax has existed much longer than it has in the UAE. In fact, one of the appealing things about the UAE for shopping, particularly for Europeans, has been the cheaper cost of these products compared to their home countries.
Excise tax generally refers to what we call a “sin tax”—a tax on products deemed harmful to society, such as unhealthy goods. The range of products to be included is still being defined. There’s an announcement, but the decree itself, detailing specifics like which products will be taxed and at what rate, has not yet been made public.
Host
The GCC Supreme Council ministers meeting last December issued a resolution on excise goods. They explicitly mentioned cigarettes, energy drinks, and soft drinks. Is it speculation that fast foods will also be included?
Ludmila Yamalova
It’s possible. Fast food is typically included under excise tax in other jurisdictions. As for soft drinks, the definition can vary, so more clarity is required about which products will fall under this.
Host
Is there a legal definition of a soft drink?
Ludmila Yamalova
I’m not an expert in soft drinks, but I wouldn’t be surprised if a legal definition exists. As this law takes shape, we can expect definitions specific to excise tax.
Host
This is Federal Decree Law No. 7 of 2017. According to the law, the excise tax rate will not exceed 200% of the excise price, defined as the cost of manufacture.
Before we go to break, let’s touch on VAT. We had the big Federal Tax Authority conference in Abu Dhabi last week. The FTA hosted VAT sessions, including one at Dubai Chamber and another at Sharjah Chamber. News from those sessions—free zones came up. What are you hearing?
Ludmila Yamalova
Yes, this is a key topic. Previously, it was unclear whether free zones would be included under VAT. By definition, free zones are tax-free. At a recent briefing, it was clarified that free zones are exempt—not 0% rated, but fully exempt.
This distinction matters. Exempt entities cannot recover VAT they pay on goods and services, unlike 0% rated entities, which can claim refunds. Free zone companies won’t register as tax entities, but they will still pay VAT on purchases without reimbursement.
Host
Lots of texts coming in. If you have questions for Ludmila Yamalova from Yamalova & Plewka Legal Consulting, text us at 4001, use the free app, or call 423 1010. Stay tuned for more insights on property transfers, excise tax, and VAT.
Host
Welcome back to the Legal Hour on Drive Live. We’re joined by Ludmila Yamalova from Yamalova & Plewka Legal Consulting. Ludmila, before the break, we touched on excise tax and VAT. Let’s pivot to another big topic: property transfers—specifically when the seller doesn’t have a UAE bank account. This sounds like a logistical nightmare.
Ludmila Yamalova
It can be more complicated than it seems. Surprisingly, this issue arises more often than you’d expect. It typically involves sellers who are not UAE residents, and therefore don’t have local bank accounts. In some cases, they’re not even present in the UAE during the transaction, relying instead on representatives through a power of attorney.
The key complication stems from the UAE Land Department’s requirement that the purchase price be paid via a manager’s check.
Host
For those unfamiliar, what’s the difference between a manager’s check and a personal check?
Ludmila Yamalova
A manager’s check is as good as cash. To get one, the buyer must already have the full amount in their bank account. The check is issued directly by the bank, guaranteeing the funds are there. A personal check, on the other hand, depends on the account holder having sufficient funds at the time of deposit.
Host
So if the seller doesn’t have a UAE bank account, what happens to that manager’s check?
Ludmila Yamalova
That’s where the problem arises. Without a local bank account, the seller can’t cash the manager’s check. This leads to alternatives that are far less straightforward and can involve significant risks.
One option is for the seller to physically appear at the transfer center and confirm they’ve received the payment. But this introduces another question: how was the payment made? If the payment was in cash, managing and transferring large amounts of cash is cumbersome and risky.
Alternatively, the buyer could transfer the funds to a trusted third party—say, a friend or law firm—with a UAE bank account. The manager’s check would then be issued in the third party’s name.
Host
That sounds risky.
Ludmila Yamalova
It is. You need to completely trust the third party, as they’ll be holding a significant sum of money on your behalf. There are also practical complications. For example, what if something happens to the third party, or there’s a dispute about the funds?
A safer alternative might be for the seller to open a non-resident bank account in the UAE. Some banks now allow this, though the process can be time-consuming.
Host
What about escrow accounts? Are they an option?
Ludmila Yamalova
In theory, yes. But the UAE doesn’t currently have traditional escrow accounts for property transactions outside of off-plan purchases. Some parties use law firms or real estate agencies as makeshift escrow agents, but this is not without risk. These entities are not independent third parties in the true sense, and disputes can arise.
Host
Let’s pivot to a few listener questions. Tim, what’s coming in?
Host
Here’s one from Mark: “What are the RDC fees to open a case for eviction or non-payment of rent?”
Ludmila Yamalova
Great question. The Rental Dispute Center (RDC) charges 3.5% of the claim amount. For eviction cases, it’s 3.5% of the annual rent value. If you’re also filing for non-payment of rent, you’ll pay another 3.5% of the amount owed. However, there’s a cap: AED 20,000 for monetary claims, AED 15,000 for non-monetary claims, and AED 35,000 for the combined total.
Host
We’ve got another one from Tarek: “My wife and I are Muslims with property in the UAE and the UK. How many wills do we need?”
Ludmila Yamalova
As Muslims, your UAE assets automatically fall under Sharia law. This means you cannot create a will to distribute your UAE property to family members. Instead, Sharia law dictates the division of your assets.
For your UK property, it depends on UK laws. Many European countries allow Muslims to create wills that will be enforced locally. You’ll need separate wills for each jurisdiction to cover your assets effectively.
Host
Ludmila, we’re out of time for now, but there’s so much more to unpack. Thank you for answering our questions with such clarity.
Ludmila Yamalova
Always a pleasure.
Host
That wraps up the Legal Hour on Drive Live. Join us next week for more legal insights from Ludmila Yamalova. Don’t forget to send your questions early to 4001 or via the free app. Until then, stay informed with Dubai Eye 103.8.