Aviation will be exempted from any taxation resulting from the country’s implementation of value added taxation (VAT) in 2018, according to a decree signed yesterday by the UAE president.

The five percent tax will come into effect on 1 January and will apply on “the import and supply of goods and services at each stage of production and distribution”, according to a statement issued by the UAE’s state news agency WAM.

However, the decree assigned a ‘Zero Rating’ to all aspects of aviation including the sale of tickets, catering and onboard sales, and maintenance on equipment.

“Zero rating applies to… the supply of goods and services related to the means of transport, which are for operating, repairing, maintaining or converting them, the supply of aircrafts or vessels designated for use in the assistance or rescue by air or sea,” and the supply of goods and services “designated for consumption on board; or anything consumed by means of transportation,” the decree reads, according to Arabian Business.