UAE to in­tro­duce ‘world’s low­est VAT’

The Star (St. Lucia) - - BUSINESS - By Eu­gene Costello

The United Arab Emi­rates (UAE) is to in­tro­duce a value added tax (VAT) levy from Jan­uary 2018 for the first time — but is soft­en­ing the blow by set­ting the rate at what it says will be one of the world’s low­est.

UAE fi­nance min­is­ter Sheikh Ham­dan bin Rashid Al Mak­toum who is also deputy ruler of Dubai and chair of the Fed­eral Tax Au­thor­ity, said the rate has been set at just 5%, low com­pared with rates in, say, Europe that av­er­age around 20% as with the UK (Switzer­land at 8% is Europe’s low­est, with Hun­gary the high­est at 27%).

He de­scribed the new levy as be­com­ing “the bedrock” of the UAE’s planned tax­a­tion sys­tem, and re­vealed that the move is hap­pen­ing in con­cert with the five other mem­bers of the Gulf Co­op­er­a­tion Coun­cil — Saudi Ara­bia, Qatar, Bahrain, Kuwait and Oman — and will be rolled out in tan­dem across the re­gion.

The move is be­ing seen as another step in the de­vel­op­ment of other rev­enues for the state to re­duce overde­pen­dency on oil rev­enue as tra­di­tional mar­kets look to clean tech­nol­ogy and re­new­able forms of en­ergy.

The Min­istry of Fi­nance said in a state­ment that that all sup­plies of goods and ser­vices will be sub­ject to VAT at a stan­dard rate of 5% with the ex­cep­tion of spe­cific sup­plies for which a zero rate will be ap­pli­ca­ble.

Zero rat­ing will ap­ply when goods and ser­vices are be­ing ex­ported out­side the GCC and to in­ter­na­tional trans­porta­tion of pas­sen­gers or goods, sup­plies of crude oil and nat­u­ral gas and to ed­u­ca­tion and health ser­vices.

--- In­ter­na­tional In­vest­ment

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