UAE: Willing to Introduce Taxes

The United Arab Emirates (UAE) is willing to introduce taxes. However, before any decision is made, the government confirms it will examine and evaluate the advantages and disadvantages before introducing new taxes.

The UAE government discusses matters and issues extensively before making any decision. The government evaluates each matter and analyzes the affect their decision will have on the general competitiveness of the country. Having said that, the UAE is a member state of the GCC, thus in regards to the introduction of a VAT all the GCC countries need to make a unanimous decision. 

The UAE government has not specified what kind of taxes it plans to introduce and when it plans to introduce them. Currently, tax discussions revolve around the implementation of a VAT, Corporate Tax and a tax on remittances. The introduction of taxes is significant to the UAE as its oil revenues have declined due to the decrease of oil prices.

The GCC have undertaken several studies regarding the introduction of draft VAT legislation. Nonetheless, the GCC has not made a final decision due to the fact the member states have not yet concluded on the rate of the tax and tax exemptions.

Tax & Economic Implications

As aforementioned, several studies have been conducted to evaluate the affect the taxation will have on the economy and society. The latest study began in 2014 and was completed at the beginning of 2015. 

The studies review to what extent taxes will affect the growth rate of the UAE economy and its global competitiveness.

Once a final decision has been made regarding the introduction of VAT, the UAE government will make an official announcement to inform companies and the public. The entities and sectors that will be subject to the VAT will be allowed a period of 18 months after the tax is introduced in order to adjust, fulfil and comply with their tax obligations.

Several studies have been conducted regarding  the Corporate Tax the UAE is planning on introducing in order to evaluate the extent the introduction will influence companies in general. A draft law is still being reviewed and the tax rate has not been set.