UAE To Introduce VAT In 2018 Between 3-5 Percent

The Under-secretary at the United Arab Emirates’ Ministry of Finance, Younis Haji Al Khoori confirmed that Value-Added-Tax (VAT) will be introduced across the UAE and the GCC in 2018.

Al Khoori made several comments in this matter at the sidelines of the first meeting of the Under-secretaries of the Arab Ministries of Finance, organised by the UAE Ministry of Finance in cooperation with the Arab Monetary Fund. As reported, Al Khoori stated: “The VAT would be introduced at the rate of between 3 per cent to 5 per cent of the goods’ value, but Gulf Cooperation Council (GCC) countries are yet to finalise their implementation policy”.

With the introduction of the VAT, Al Khoori stated that the UAE hopes to earn estimated VAT revenues of u to Dh12 billion in the first year of its application. He affirmed that this amount is after the exemption of imposing tax on sectors such as healthcare, education, social services, and approximately 94 food items that have been agreed by the GCC countries.

As noted, the tax law is currently in preparation stage and the draft law has been approved by local authorities. The UAE Under-secretary commented that the VAT can be introduced once any of the two GCC countries are ready with their tax laws and present them to the GCC Secretariat. Two years, however, are necessary for the adoption of the law, and therefore the estimated year for the implementation of the VAT is 2018.

The introduction of the VAT is considered to be a viable alternative source of revenue for the UAE following the impact of failing oil prices in recent years on the in the UAE’s finances.

What concerns other taxes, in a recent interview the Saudi Deputy Crown Prince, Mohammed bin Salman bin Abdulaziz, ruled out the imposition of any income tax in the country as he stated: “There are going to be no income taxes, and no wealth taxes,” he said. “We’re talking about taxes or fees that are supported by the citizen, including the VAT and the sin tax”.

Source: GulfBusiness.com 14/01/2016 & Emirates247.com 14/01/2016

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