By Neil Halligan
Comments come ahead of Gulf Cooperation Council planning to introduce the value-added tax in 2018
The introduction of a value-added tax (VAT) in the UAE will not have a significant impact on US trade, according to US-UAE Business Council president.
The UAE, along with governments across the Gulf, has been planning fresh ways to raise money as low oil and gas prices open up big deficits in state budgets. In 2018, the six members of the Gulf Cooperation Council plan to introduce the value-added tax.
Trade between the US and the UAE was $26bn in 2015, and according to the chairperson of US-UAE Business Council, there will be minimal impact on that following the introduction of VAT in the UAE.
“We're looking at numbers this year - it's going to be close, plus or minus in a very comparable range [to $26bn],” said Danny Sebright, president of the Washington-based US-UAE Business Council.
“The impact is going to be negligible, from my point of view.”
He said the creation of the new UAE tax authority underlined how the UAE implemented new initiatives “very professionally”.
“They bring in teams of world class consultants to advise them on what are best practices,” Sebright said.
US-UAE Business Council, a bilateral chamber of commerce between the two countries, has 60 percent of members from US companies, and 40 percent from the UAE. Sebright said it’s an important issue for all members.
“In general, members understand the need for not only the UAE but the other countries in the GCC to implement some new tax structures in light of depressed oil prices and the pressure on budgets that has occurred as a result,” he said.
“The main concern that all of our members have is that these taxes are implemented with best standards in mind for how these taxes occur in other countries around the world and that they be implemented under a timeline in a manner that is least disruptive to the marketplace and doesn’t create distortions in pricing and those sorts of things.
“Some of our members have concerns that if the excise tax in particular is not implemented with best standards and the right timeline, there will be opportunities for counterfeiting of products and things like that.”
A number of products will be exempt from VAT, and based on recent conversations with high-ranking government officials in the UAE, Sebright confirmed that key food items and healthcare-related products, will be part of that list when it’s published.
"[They were] clear with me that it was going to be healthcare related and key foods. There would be no exclusions for other areas, whether it would be life or health insurance policies or things like that, it would be purely healthcare related products and services, and food products,” said Sebright.
But won't Mr. Trump's retaliatory import tariff on country's with a VAT result in a 5% import tariff on goods from UAE - including all O+G products?