Saudi Arabia recently increased Value-added Tax (VAT) to 15% which is three times its initial rate of 5%, which will come into effect from July 1st. The Kingdom has also suspended the cost of living allowances as of 1st June as a measure to support the country’s economy and increase the revenues amid the COVID-19 the pandemic. An unprecedented Sharp Decline in oil prices and non-oil revenues caused the kingdom to make the surprising decision. This decision of Saudi Arabia will prompt a discussion in the UAE and other neighboring GCC countries to increase the VAT rate in their respective countries.
Many European and Asian countries are turning to emergency tax breaks to support their economies against the Covid-19 threat. India, China, Finland, South Africa, Bulgaria, the US and the EU have announced some form of relief for their businesses and consumers in taxes to cope with the virus.
The Finance Ministry of UAE has announced that it has no plans to hike the VAT rate.
According to the Ministry of Finance the country has no existence of any immediate plans to raise value-added tax (VAT) in the United Arab Emirates beyond its current rate of 5% and has reaffirmed its commitment to achieving the country’s goals and development plans.
The MOFUAE posted on its official handle “The UAE has taken exceptional measures to contain the effects of the global coronavirus pandemic that has affected even the largest economies, to protect its economy & reduce the economic repercussions of the crisis on the business sector & on various sectors of society”.
Undersecretary of the UAE’s Ministry of Finance Mr. Younis Haji Al Khoori said there were no plans for an increase. “We at the Ministry of Finance are studying our financial systems to ensure their readiness to manage the next stage and support all vital sectors. We are devising several programs and projects to enhance our ability to continue the development process and to put people as our top priority. This is essential to build a secure future and achieve the well-being and stability of our society”.