Monday, 12 February 2018

UAE VAT Rates May Get Increased After 5 Years

UAE VAT Rates May Get Increased After 5 Years

VAT has been officially announced in the UAE on 1st Jan 2018 on the consumption of goods and services in UAE. The starting rates in UAE is 5%, which is the lowest in the world.

The tax authorities decided to launch the VAT that came into effect in two GCC countries from the starting of 2018  which is also considered "one of the lowest rates in the world". After the launch, VAT which is now been very successful in UAE, the tax authority official announced that International Monetary Fund that would increase to 10 percent after five years.The IMF mission chief to Saudi Arabia, Tim Callen, said GCC stated that they might have to increase the tax rate above the five percent, but it depends on the needs of each country, but not before upcoming 5 years.

It will be a new source of income for the government, which will provide better and more advanced public services.VAT applies some rules and regulations on food, public transport, and some health care service are exempt from the Vat, while some other service will be levied with zero percent.

"our extension is, we don't consider any types of increment of the vat from the 5 % for the next 5 year.however, we all know that within one month the vat has given a good result so we all are suggested that once the VAT is successfully implemented and the people are now  easy to follow it, after that, we will think for any VAT increment in the future but it depends on the revenue needs of the individual country" said callen.

The IMF official said Some other important angles are that we all know that the UAE of the vat is 5 percent is extremely low in the world. We would increasing VAT if needed at some point of time in future. The all Six GCC member countries had to decide VAT launch date in 2016 to introduce the levy, but as we know only Saudi Arabia and the UAE have implemented it from January 1, 2018. In case if any changes in the VAT rate applies it would necessitate to modification in the GCC-wide agreement.

The IMF and World Bank have been demanding the GCC states to introduce taxes. VAT has been implemented in UAE with the aim to reduce the country’s dependency on oil resources for revenue. The conclusion is that the introduction of VAT could generate new non-oil GDP of 1.5 to 3 percent.
The government of Saudi Arabia and the UAE have to provide all types of introduction to the people related to the VAT. It gives a full effort to know the information and it is very useful to the citizen involving all the business in the right way.

The UAE is expected to increment around $3.3 billion from the VAT, by which Saudi Arabia, have to show the biggest budget in its history. It is possible to spend $261 billion this economic year as the government forecasts a boost in revenue from the VAT. As part of economic assortment efforts, the kingdom is broadening its investor base and boosting other non-oil income.

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