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No plans to hike VAT in the UAE, officials reiterate

No plans to hike VAT in the UAE, officials reiterate

The UAE government levied a 5 per cent VAT on goods and services in January 2018

The UAE has no immediate plans to scale value added tax (VAT), officials have confirmed.

Saeed Rashid Al-Yateem, assistant undersecretary for Resources and Budget Affairs, reasserted the stance of not increasing VAT at present, underscoring the assurance issued earlier in May.

Read: No plans to hike VAT in the UAE – ministry

Total VAT revenues amounted to Dhs11.6bn from the beginning of January until the end of August 2020, while the total revenue of excise tax for the same period increased by approximately 47 per cent compared to a year-earlier period, official news outlet WAM reported.

Meanwhile, tax revenue for 2019 amounted to about Dhs31bn, compared to Dhs29bn in 2018.

VAT revenues were distributed at a rate of 30 per cent to the federal government and 70 per cent to local governments, the assistant undersecretary confirmed.

The federal government’s share of the excise tax revenue on tobacco and its products represents 45 per cent and 55 per cent for local governments, while the former’s share represents 30 per cent of excise tax revenues on other excise goods such as energy drinks, soft drinks and sweetened with added sugar, he added.

“Tax revenues will contribute to the continuation of the implementation of development projects in accordance with the plans targeted by the UAE government, and in mitigating the repercussions of the pandemic,” noted Saeed Rashid Al-Yateem.

“The Ministry of Finance continues to follow up tax policies in coordination with the Federal Tax Authority to ensure its alignment with developments in the regional and international arena. And updating legislations continuously in line with the goals of financial policies and sustainable economic growth.”

The UAE government instituted a 5 per cent VAT on goods and services in January 2018, to promote the country’s economic growth and to wean itself off dependence on oil revenues.

Earlier this year, Saudi Arabia decided to implement a spate of austerity measures, which included an increase in VAT, from 5 per cent to 15 per cent starting July 1.

Read more: Saudi Arabia triples VAT, cuts cost of living allowances

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