The UAE Cabinet has decided to refund a 5 per cent value added tax for institutions working in the exhibitions and conferences sector.
Facilities involved with organising events have the right to refund the tax levied of providing these services, according to state news agency WAM.
The change is intended to support the country’s status as a hub for the meetings, incentives, conferences and exhibitions (MICE) industry and to attract leading event organisers.
Any exhibition or meeting between people sharing the same interest that is held for seven days or less and is authorised by the competent local authority is eligible for the VAT refund provided the service recipient has no established base or permanent facility in the UAE.
The service recipient must also not be registered or obliged to be registered in the UAE and have paid any tax to the supplier.
Abu Dhabi National Exhibitions Company (ADNEC) group CEO Humaid Matar Al Dhaher released a statement supporting the move.
“The decision to refund Value Added Tax (VAT) by institutions working in the exhibitions and conferences sector will significantly enhance the competitiveness of the industry and increase the capacity to attract niche global events, exhibitions and conferences,” he said.
“It will trim costs incurred by organisers and international associations while also enabling local associations to submit more bids for hosting major international conferences and congresses and enhancing the support of partnerships with the public and private sectors.”
He went on to invite public and private sector firms, event organisers and specialised associations to make “optimum use” of the initiative and consolidate their presence in the UAE.
The MICE industry contributes around Dhs2.39bn ($650.7m) annually to the UAE economy and is anticipated to grow to Dhs5.1bn ($1.38bn) by 2020.
The cabinet’s decision follows a similar move earlier this month reversing the application of the tax on the wholesale gold, diamonds and precious metals market.
The UAE introduced the value added tax alongside Saudi Arabia on January 1.
It applies to most goods and services including groceries, fuel and utility bills.
Last week an International Monetary Fund (IMF) official told Reuters that the implementation of the tax had gone smoothly and its impact on inflation was expected to ease.
Natalia Tamirisa, who heads the IMF mission to the UAE, said inflation is expected to average 3.5 per cent this year, up from 2.0 per cent last year, but will ultimately settle around 2.5 per cent, Tamirisa predicted.
She said the new tax was expected to lift revenues by 1.5 per cent of gross domestic product in the long run.