UAE faces VAT as early as Jan

TAX LOOMING: VAT could be introduced in the UAE as early as January, Al Saleh said. (Getty Images)

UAE is planning to introduce a value added tax (VAT) in the first quarter of 2009 but a final decision on the timing has yet to be made, a senior Dubai customs official said on Monday.

"We will be the one to launch it first," Abdul Rahman Al Saleh, Dubai Customs' executive director, told newswire Reuters.

"We were planning for the last quarter of 2008 but we have put it back to the first quarter of 2009."

Oman also plans a VAT as part of a government drive to cut its reliance on oil and could bring in the measure as early as next year.

He said the tax would be "between 2 and 5%" - though below 5% - and would help compensate for revenue lost when the customs duty is scrapped, upon introduction of the VAT.

"VAT is the best tax system for strengthening the economy of the UAE," he said.

The tax will be imposed on consumer goods and services.

Al Saleh said that any inflation caused by the VAT should be less than a "diminishable half a percent".

Inflation in the second-largest Arab economy hit a 19-year peak of 9.3% in 2006 and probably accelerated to 10.9% last year, according to a National Bank of Abu Dhabi (NBAD) estimate.

In April, the UAE's economy minister said the dollar-pegged oil producer's inflation target of 5% this year would be "a miracle".

Al Saleh said that VAT could be introduced across the Gulf Arab region by 2012, but that such a move "depends on the situation and the economy and the way they do things". (Reuters)

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USER COMMENTS (4 COMMENTS)

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VAT SHOWING FUTURE FOR UAE
Posted by AHMED WAQAS, chakwal, pakistan on 13 August 2008 at 21:39 UAE time

I'm afraid VAT in the UAE is not the answer. I think they should plan for current inflation of the world through other means. other wise they will suffer a lot.

VAt and visa fee
Posted by Anbar Badshah, Islamabad, Pakistan on 31 May 2008 at 09:47 UAE time

It will be a big blow for the UAE government and a threat for the investors to invest in Dubai if VAT is imposed and visa fees increased.

tax
Posted by andy, dubai, UAE on 27 May 2008 at 18:24 UAE time

This is the last straw for my choice to live in the UAE.
The increase in rents from greedy leeches.. sorry i mean landlords, the further introduction of Salik gates, general double digit inflation, worsening traffic and driving standards, lack of enforced laws for the later, now VAT... This is the one last increase I shall put up with.. back home it is where I am now better off living in my own country than living in Dubai.. I wonder for how many the tide is turning..

Dubai beware... I as many other long term residents have started our plans to move on and have a better life elsewhere as Dubai cannot offer that anymore.

VAT introduction to the UAE
Posted by Kevin on 27 May 2008 at 14:19 UAE time


It is somehow pitty to introduce a VAT. It was the "Tax free " status of the gulf countries that attracted tremendous talent to this region. Think about it, If I have taxes just like back home, why would I stay far away suffering from heat and humidity!. On the top of high inflation, rent cost, skyroketing real estate, high school fees, high food prices, huge traffic issues..etc VAT will only make it worse in my humble opinion.

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