Team shortlist14 Jan 2016 AT 10:09 AM

VAT coming to the UAE in 2018

Will other taxes follow?
Team shortlist14 Jan 2016 AT 10:09 AM
VAT coming to the UAE in 2018

Value-Added Tax could be introduced in the UAE in 2018, according to reports. This comes as part of plans to introduce VAT at around three to five percent across the GCC.

The Ministry of Finance say that this is expected to generate between AED10 billion and AED12 billion in revenue during its first year. This projected figure excludes sectors like healthcare, education, and 94 food items, which are all exempt from VAT.

Younis Haji Al Khoori, Undersecretary at the Ministry of Finance, said that countries across the GCC have agreed to unify their tax policies before VAT is introduced in 2018.

So what does that mean for other taxes? Saudi Arabia’s Deputy Crown Prince, Mohammed bin Salman bin Abdulaziz, Second Deputy Prime Minister and Minister of Defense, spoke to Economist magazine last week to say that, although the country would be implementing VAT, there we no plans to introduce income tax.

As for the UAE, it seems that the answer is similar. Last month, Obaid Humaid Al Tayer spoke at the Federal National Council, saying: “There is no intention and no plans to impose taxes on the income of individuals in the UAE.”

Although the UAE is looking a tax reforms, there are no current plans to tax individual salaries. One possible move that the government is exploring, according to Gulf News, is taxing remittances that foreign workers send home, although it has been noted that this would need significant studies and no plans are currently in place.

One taxation area that is being considered is corporation tax. “We are still studying the corporate tax law, which is still in its initial stages and it is being discussed with local governments and no agreement has been reached so far,” said Obaid Humaid Al Tayer.

So it seems that although some taxes are being introduced, the UAE’s workforce won’t see a difference on their pay slips each month.