The United Arab Emirates (UAE) does not have any possible plans for an increase in the rates of VAT or value added tax as per the latest reports. There was immense speculation about an impending increase in the aftermath of the COVID-19 pandemic which has considerably disrupted several global economies. This was fuelled by reports of Saudi Arabia planning to triple VAT rates to 15% from the existing threshold of 5%.
The absence of any plans to hike VAT rates was confirmed by the UAE Ministry of Finance as per reports. The rate of VAT in the United Arab Emirates (UAE) is presently fixed at 5% and this was unveiled in early 2018 although specific items are exempted from taxation. All the 6 countries present in the GCC or Gulf Cooperation Council inked their agreement in the year 2016 for introducing this new system of VAT for taxation at the rate of 5%. 2018 saw this introduced by the UAE in tandem with Saudi Arabia. In 2019, VAT was introduced by Bahrain as well.
The tax authorities in the UAE have already stated previously that due dates for VAT payments concluding on 31st March, 2020, would be extended till the 28th of May, 2020, with a view towards providing support to businesses and the UAE economy amidst the ongoing COVID-19 pandemic. Saudi Arabia has already stated that it would be implementing several measures for stabilizing the economy and combating the economic impact of COVID-19. These measures included a proposed hike in rates of VAT (value added tax). However, the UAE will not be following suit and hiking rates of VAT as has been confirmed now by the Ministry of Finance.
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Saudi Arabia has confirmed several measures aimed at battling the current economic slump, driven by lower oil prices which have fallen to record levels and the overall slump owing to the coronavirus outbreak. Measures for austerity include this proposed VAT rate hike to 15% from 5% as mentioned earlier. The UAE’s plans to similarly hike VAT have been rubbished in a statement by the undersecretary of the Ministry of Finance, UAE, Younis Haji Al Khoori.
He has already stated that the Ministry of Finance is currently engaged in deeply understanding and analyzing the country’s financial systems for making sure that they are aligned with the next stage of economic growth and for providing support to all necessary economic sectors. Multiple projects and programs are being formulated for enhancing the country’s overall capabilities in terms of continuing with its upcoming developmental projects while prioritizing citizens above all else, according to him. He also added that this process was vital for crafting a more secure future and achieving greater stability and well-being in the society.
Younis Haji Al Khoori also stated that the UAE has been eager to implement various precautionary steps while unveiling new financial plans for safeguarding the economy while providing support to several business sectors simultaneously. The VAT rate was unveiled in early 2018 and is presently at 5%. Some of the other measures taken by Saudi Arabia also cover the conclusion of the allowances of monthly cost of living that are paid out to government employees along with lower spends on programs which are under the Vision 2030 transformation blueprint of Crown Prince Mohammed bin Salman. GCC Filings is where you should go if you want help with VAT registration, company incorporation, auditing, taxation, accounting services in the UAE.