UAE has no plan to hike VAT; generates Dh11.6b VAT revenue

ABU DHABI — The Ministry of Finance (MoF) on Tuesday announced it generated Dh11.6 billion value-added tax (VAT) during the first eight months of 2020 despite a challenging business environment and slowdown in global economy in the wake of the Covid-19 crisis.

In a statement, the ministry said the country’s total excise tax revenue amounted to about Dh1.9 billion during the January-August period, reflecting an increase of 47 per cent over the same period last year.

Saeed Rashid Al Yateem, assistant under-secretary of resource and budget sector at the MoF, said that 30% of VAT revenues will be distributed to the federal government and 70% to local government.

He affirmed that there are no plans or decisions at the moment to raise VAT to more than 5% in the UAE.

Related Posts
1 of 583

Al Yateem mentioned that the federal government’s share of excise tax revenues on tobacco products is 45% — with 55% for local governments – and the federal government’s share of the excise tax revenues on other excise goods (i.e. energy drinks, soft drinks as well as beverages sweetened with added sugar) is 30%.

“Tax revenues contribute to the continued implementation of development projects in accordance with the UAE government’s plans, and to mitigating the repercussions of the Covid-19 pandemic. Therefore, the MoF continues to follow up on tax policies in coordination with the Federal Tax Authority (FTA) to ensure they’re in line with developments in the regional and international arena and that legislations are continuously updated in accordance with financial policy objectives and sustainable economic growth,” Al Yateem said.

The tax revenues generated in 2019 amounted to about Dh31 billion, compared to Dh29 billion in 2018. The growth rate of total tax revenues in 2019 increased by about 7% in comparison to 2018.

The UAE began applying VAT on January 1, 2018, at a basic rate of 5% on most goods and services levied at each point of sale.

[email protected]

Get real time updates directly on you device, subscribe now.