The UAE does not plan on increasing VAT, officials reiterate

In January 2018, the government of the United Arab Emirates levied 5% of the VAT on services and goods.

Officials have informed that the United Arab Emirates has no current plans of scaling Value Added Tax (VAT).

From the start of January till the ending point in August 2020, the total VAT returns add up to AED 11.6 billion. Though the total returns of excise tax in the same amount of time increased to approximately 47% compared to last year’s period.

Furthermore, the tax revenue in 2019 added up to about AED 31 billion in comparison to 2018’s AED 29 billion. The assistant undersecretary reaffirmed that the VAT revenues had been distributed to the national government at a rate of 30% and to the local governments at the rate of 70%.

The portion of the tax applied to tobacco and related products are divided between the federal government and local government in the ratio of 45% and 55% respectively. Moreover, the local government’s 55% share contains 30% of the taxes on soft drinks, energy drinks, and other products with sugar.

The revenue generated from taxes will accommodate the continuance of important developmental projects according to the government’s original plan. It further helps in reducing the negative impact the pandemic has had on the market and economy.

To add to this, the Ministry of Finance keeps following up on tax-related policies according to the Federal Tax Authority. This ensures that the policies are in line with the developments in both international and regionals areas. Furthermore, legislations are continuously updated as well in terms of finances and economic development.

The VAT that was applied in the UAE in 2018 was to become independent in terms of oil revenues and to increase the nation’s economic growth.

In this year’s beginning, Saudi Arabia decided on implementing a wave of strict measures that increased the VAT from 5% to 15%, starting from the 1st of July.