5% VAT will be rolled out across the Gulf next January


It’s official: a value-added tax (VAT) of 5% is coming to the UAE on January 1, 2018, and it’ll be levied on pretty much everything straight off the bat.

That’s the word from Younis al-Khouri, Under-Secretary at the UAE Finance Ministry, who spoke to Zawya this week. He said that some industries may be exempt from VAT to start off with, while the government implements the infrastructure required for rolling out the tax, but this would be the exception, rather than the rule.

And don’t think that you’ll be able to save money by buying things from other Gulf countries when the tax comes into place. According to al-Khouri, the aim is to have all six GCC nations roll out VAT at the same time.

“By 2018, January 1, we are aiming to adopt 5% VAT across the GCC,” he said in the joint interview with Zawya and Reuters.

Of course, we’ve known for quite a while that VAT is coming to the region, but these are some of the first specifics that we’ve been given. Last summer, the government said that 94 basic food products would be exempted from the tax, but there have been no further confirmations on what those products would be. Analysts reckon fresh fruits, coffee, tea, flour, milk and rice to be among the basic food products that won’t be levied.

For pretty much everything else, though, consumers are looking at a 5% tax on everything they buy. Well, actually, the businesses supplying products will pay the tax, but it’s expected that many will simply pass the cost on to consumers. That means that a product that used to cost AED 100 could, next year, cost AED 105.

Again, there may be exceptions. For example, the UAE is prioritising registering companies with annual revenues of $100,000 or over for the tax, meaning that smaller firms may have a little more time before signing up to the VAT system. What’s more, some sectors like education and healthcare may get special treatment.

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