UAE has no plan for now to increase VAT

Inayat-ur-Rahman, Deputy Business Editor

The UAE has no plan to increase value-added tax (VAT) to more than the current 5%, the ministry of finance said on Tuesday.

Saeed Rashid Al Yateem, Assistant Under Secretary of Resource and Budget Sector at MoF affirmed that there are no plans or decisions at the moment to raise VAT to more than 5% in the UAE.

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The Ministry of Finance (MoF) announced on Tuesday that from the beginning of January until the end of August 2020, the total value-added tax (VAT) revenue amounted to Dhs11.6 billion, and the country’s total excise tax revenue amounted to about Dhs1.9 billion – the latter noting a 47% increase in comparison to the same period in 2019.

Saeed Rashid Al Yateem, Assistant Under Secretary of Resource and Budget Sector.

Al Yateem noted that 30% of VAT revenues will be distributed to the federal government and 70% to local government.

He mentioned that the federal government's share of excise tax revenues on tobacco products is 45% - with 55% for local governments — and the federal government's share of the excise tax revenues on other excise goods (i.e. energy drinks, soft drinks as well as beverages sweetened with added sugar) is 30%.

Al Yateem said: “Tax revenues contribute to the continued implementation of development projects in accordance with the UAE government’s plans, and to mitigating the repercussions of the COVID-19 pandemic. Therefore, MoF continues to follow up on tax policies in coordination with the Federal Tax Authority (FTA) to ensure they’re in line with developments in the regional and international arena and that legislations are continuously updated in accordance with financial policy objectives and sustainable economic growth.”

The growth rate of total tax revenues in 2019 increased by about 7% in comparison to 2018.

The tax revenues generated in 2019 amounted to about Dhs 31 billion, compared to almost Dhs 29 billion in 2018. The growth rate of total tax revenues in 2019 increased by about 7% in comparison to 2018.