Planned valued added tax of up to 5% in 2018 awaits GCC approval

A planned value added tax on goods and services will range between 3 to 5 per cent when it comes online in 2018. It could help to replenish regional coffers following a steep decline in the price of oil, generating billions of dirhams in extra revenues. But it is still awaiting final approval from GCC […]

A planned value added tax on goods and services will range between 3 to 5 per cent when it comes online in 2018.

It could help to replenish regional coffers following a steep decline in the price of oil, generating billions of dirhams in extra revenues.

But it is still awaiting final approval from GCC members because it will be done within the framework of the organisation’s customs union.

Younis Haji Al Khouri, the UAE finance minister undersecretary, told reporters that the country was targeting theroll out of a value added on goods and services in 2018, suggesting that he was confident that the Emirates would get the necessary approvals from other Arabian Gulf states soon.

“We have a tentative approved plan for 2018,” Mr Al Khouri said on the sidelines of an Arab Monetary Fund meeting in Abu Dhabi yesterday “We have to obtain GCC approval from two countries. The leaders of the GCC have already approved the tentative plan of 2018, so we are waiting for that. Once two countries will approve, then the implementation will start.”

The finance ministry said last year that it was also studying federal wide corporate taxation.

Mr Al Khouri did not elaborate on the vetting system but said any two other members of the GCC were needed to ratify the agreement. It was not immediately clear if there are dissenters to the agreement within the GCC. The finance ministry said last year that it was also studying federal wide corporate taxation. though Mr Al Khouri did not address the subject nor did he comment about speculation that the country may also introduce a tax on remittances.

Analysts say the introduction of taxes will be gradual to avoid making the UAE a less competitive place. The country’s tax -free status has attracted millions of expats over the years looking to bolster earnings.

mkassem@thenational.ae

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Source: Business

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