Value added tax will be introduced to the UAE from 2018 at a rate of 5 per cent, while studies into a possible corporation tax are also under way.
Obaid Humaid Al Tayer, the Minister of State for Financial Affairs, said that the government was in the initial stages of examining the social and economic impact of such a tax as well as how it might affect competitiveness.
He made the disclosure at a press conference with Christine Lagarde, the IMF’s managing director, in Dubai. He said: “There is no time frame for implementing this tax and no law or draft law has been stipulated.”
Mr Al Tayer announced at the same event that the UAE would introduce value added tax from January 1, 2018, at a rate of 5 per cent. A GCC-wide framework for VAT is expected to be concluded by June, he said.
GCC countries have until January 1, 2019, to implement the levy. It has been previously reported that 150 food items, education and health care would be exempt from the levy.
Despite the zero-tax environment acting as a significant draw for companies looking to the UAE, Ms Lagarde played down the potential effect of corporation tax on business activity in the country.
“The localisation and development of investment by companies … is not predominately driven by a tax rate,” she said.
The IMF chief acknowledged it may play a part, but that it was just one factor to consider.
Courtesy: The National