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Investors’ trust in UAE economy zooms
February 05, 2018
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DUBAI: Alliance Business Centers Network (ABCN), has affirmed that the UAE is the least affected globally and regionally when it comes to imposing the value added tax (VAT) on business sectors, which makes its investment environment constantly competitive for all sectors.

A recent study conducted by the group showed that the UAE has the lowest VAT regionally and globally, compared to countries such as UK, Switzerland, Germany, Mexico, South Africa and Australia. The UAE VAT rate is also the lowest among the Arab countries that apply this tax.

The study, which compared between the UAE and a number of countries around the world, revealed that the VAT in UK and France was 20 per cent, Germany 19 per cent, China 17 per cent, Mexico 16 per cent, South Africa 14 %, Australia (Tax similar to VAT) 10 per cent and Switzerland 8 per cent. This means that the UAE is one of the world’s lowest countries in terms of imposing taxes.

The study showed that Taiwan imposes one of the lowest VAT rates at 5 %, followed by Singapore at 7 %, whereas the VAT soars up to 27 % in Hungary, 25 % in Denmark, 22 % in Italy, 21 % in Spain and 18 % in Turkey.

Other countries impose a VAT including Russia at 18 %, Brazil between 7 and 18 %, India at 13.5 %, Indonesia and South Korea at 10 %, Senegal at 18 % and Sri Lanka at 12 %.

In the Arab countries, the study showed that Tunisia imposes the highest VAT at 18 %, Algeria between 7 and 17 %, Egypt at 14 % and Lebanon at 10 %.

The study valued the Cabinet’s recent decision to allocate 70 % of the country’s value added tax revenues to local governments, thereby enhancing their ability to invest in new development projects.

The study ruled out the possibility for the VAT to have any negative effects on Expo 2020 plans and projects, stressing that these projects have opened up sustainable investment areas for the UAE in all investment and service sectors.

The study emphasized that compared to the countries of the region, the UAE proved to be the best when it comes to trust in investments and the availability of comparative advantages that contribute to business growth, especially in terms of infrastructure, transparency, imposition of no income tax and tight investment- regulating legislation.

Data analysis pointed out that the federal and local budgets announced for 2018 prove that government spending on development is increasing, which encourages the business sectors to continue to grow through investment expansion, since the UAE offers a large number of incentives to encourage the growth and sustainability of business. Advanced infrastructure, services, free zones, logistics and robust financial system are some examples to name the few.

The study showed that all the federal and local budgets announced for 2018 confirmed that government spending on development was on the increase, thereby encouraging the business sectors to keep growing. The UAE also provides many incentives that encourage business growth and sustainability, backed by sophisticated infrastructure, services, free zones, logistics and robust financial system, the study added.

“The potential of business opportunities in the UAE is still high compared to regional countries, given the medium and long-term vision for development and the opening up of new investment fields, i.e. investments in artificial intelligence, ICT and other traditional investment sectors”, the Alliance study said.

According to the study, the business associated with VAT-free sectors such as health and education has also a comparative advantage, compared with the services and products provided in other sectors.

The study stated that the majority of ABNC companies operating in the UAE have the ‘know-how’ of the tax systems applicable in more than 150 countries around the world and that the VAT is the most common tax system in the world including the EU’s 28 countries.

“VAT will ultimately support the development of large public projects that contribute to business growth and sustainability,” said Sherif Kamel, Regional President for Russia ,Middle East and Africa.

Kamel revealed that since VAT was adopted, ABCN started to provide their local and international clients with the necessary guidance and consultations regarding the implementation of the tax, adding that they also familiarized the other companies looking for doing business in the UAE with the tax.

ABCN is currently looking into ways to help the companies in its network to ensure that the operations of their group of companies are run smoothly, Kamel added, noting that the efforts exerted by ABCN are focused on providing a business environment at attractive costs for their clients to develop and grow in the UAE.

The UAE government is striving to ensure the sustainability and continuity of high quality government services in the future, Kamel said.

“VAT income is a new addition to the country’s vision of reducing dependence on oil. The impact of the tax on the cost of living in the UAE will be limited and will vary depending on the lifestyle of individuals and how they behave in spending,” he added.

WAM

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