VAT to benefit the UAE’s economy
With the introduction of Value Added Tax just around the corner – it will be implemented from January 1, 2018 – many are becoming more and more concerned about the impact that the 5 percent VAT could have on the UAE’s economy.
According to the International Monterey Fund (IMF), there’s nothing to worry about.
The IMF’s latest report states that the introduction of VAT will, in fact, benefit the nation.
According to the IMF, VAT will be “another major achievement” in the UAE’s financial development following the 2014 downturn in oil prices.
The report added that VAT would complement other measures such as subsidy reforms.
“The planned VAT introduction in 2018 is not expected to have a significant adverse impact on growth,” the official report read.
If you’re new to the UAE or are new to the concept of VAT here’s what you need to know.
The news of the 5 percent VAT was confirmed earlier this year by the Under Secretary of the UAE Ministry of Finance, Younis Al Khouri, who stated that from January 1, 2018, all GCC countries will be enforcing a 5 percent VAT across the broad.
In a bid to soften the blow, the UAE announced that it will most likely be enforcing a waiver on around 100 goods and services, such as food and healthcare.
While businesses with annual revenues of over AED375,000 will be obliged to register for the GCC VAT system, there will be no income tax on salaries.
The cost of cigarettes and energy drinks will increase by 100 percent. According to an official report published by the UAE’s Federal Tax Authority (FTA), a 100 percent selective tax will be implemented on tobacco and energy drinks from the fourth quarter of this year. While a 50 percent tax will be added to all soft drinks.