UAE Takes First Step to Implement VAT

August 14, 2015 Taxation in UAE

Tax in DubaiDUBAI – The UAE could be the first Gulf country to implement a consumption tax.

Earlier this week the UAE Arabic newspaper Al Ittihad claimed that the national government has drafted a plan to introduce a value added tax in an effort to raise revenues from sources not reliant on oil.

The government has not yet announced the rate of the upcoming tax, however, it is known that the tax will be levied at a raised rate on luxury items, alcohol, and tobacco, but basic goods and everyday essentials will be exempt from the tax.

There is not yet any timeline on when the new VAT can be implemented, as the law stills needs to be approved by Federal National Council, the Federal Supreme Council, and also signed by the President Sheikh Khalifa before being enacted.

If the proposal proceeds forward, the UAE could be the first Gulf country to implement a consumption tax.

The move to introduce the tax is part of an ongoing series of measures being implemented by the government to reduce its reliance on profits from oil by broadening the taxes faced by businesses, and by placing a greater emphasis on attracting tourists to the region.

Photo by: Fabio Achilli