UAE

IMF welcomes UAE’s VAT plan

 

The United Arab Emirates (UAE) has announced plans to introduce a VAT regime and increase excise taxes, a move that has been welcomed by the International Monetary Fund (IMF).

The UAE Finance Minister has announced that Value Added Tax (VAT) will be introduced at an expected rate of 5% with around 100% items expected to be exempt. The UAE and the other Gulf Cooperation Council (GCC) members have been negotiating a proposed pan-GCC VAT for more than a decade and finally settled on a draft plan last year.

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UAE in talks to introduce VAT

UAE in talks to introduce VAT

Recently the federal Government of the UAE has announced the planned introduction of a federal value-added tax (VAT). The Ministry of Finance (MoF) confirmed that it has been conducting studies into the implementation of a VAT draft along with the other Gulf Cooperation Council (GCC) countries.

The draft law is still pending and under negotiation due to the absence of a final agreement between GCC countries on the tax rate and a list of tax exemptions, but a draft bill could be on the cards very soon. Once a draft has been created an announcement will be made immediately and the country will be given 18months grace period after the implementation to implement the VAT, if it were to go ahead. The VAT is expected to be implemented at a low rate of around 5%.