For several years, the Government of UAE considered introducing value added tax (VAT) in their economy. Although it’s the best way to strengthen their economy, no concrete measures were taken.
But with the constant decrease of oil prices over the last year, the GCC is obliged to take necessary steps for ensuring more revenue.
Value Added Tax is a good source for boosting a country’s revenue. And as the UAE is currently seeking for alternative options to strengthen their economy, this is their best option.
The Gulf countries were considering implementing VAT and corporate tax for around 5-6 years. But due to bureaucratic issues, the idea was discarded.
But earlier this year the federal and local government showed tremendous interest and a meeting was conducted among those same bureaucrats. Although they are still mulling over the impact of VAT on UAE’s economic and social conditions, the draft of the law itself will be completed within this year.
Younis Al Khouri, a renowned undersecretary of UAE is hoping to implement this law within a few months.
Economical analysts have welcomed his announcement whole heartedly. Sherif Al Kilany, a noted tax service leader has praised the government for their new initiative. By adopting this policy, the government is keeping up with the current trend of global economy; he commented. This shows that the GCC is on par with the rest of the world.
International Monetary Fund, commonly known as the IMF has been stressing over the benefits of VAT for several years. With the abrupt decrease of oil prices for a year, this new fiscal policy taken by GCC is supposed to have an affirmative effect on the economy of the gulf countries.
This new measure not only benefits the UAE economy, but it is also a delicate maneuver to attract more tourists each year.
Nilesh Asbar, partner of a renowned think tank has urged the government to carefully measure the cost increased by this new policy. Before implanting this policy, the GCC should meticulously check their business models for additional costs; he concluded.