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Is VAT Viable for the United Arab Emirates?

UAE : 03 May 2010

Analysts are currently discussing whether Value Added Tax is actually a viable option for the United Arab Emirates. Advisor to PMO said that VAT would double the UAE’s revenue from customs duties and it is planned to be implemented by a 2012 deadline. However many now feel this is too soon and more analysis of this plan need to be carried out first.

Many are also concerned that VAT will take its toll on the poorest members of society but Ehtisham Ahmad, an advisor to the UAE PMO,  argues that this is simply not the case as most of the VAT will be taken from the regions highest earners.

VAT would double the annual revenues for the region and it would not hurt the average worker and hinder the appropriate distribution of income and expenditure. At a recent seminar at the Dubai International Financial Centre Ehtisham Ahmad said that the overall distribution of revenue would not be adversely affected by the introduction of Value Added Tax.

It is estimated that the introduction of VAT could generate an extra $1.8 billion per annum for the region. However many predict that the region is simply not ready for its introduction and that despite reassurances it would actually filter down into higher costs for the more vulnerable members of society.

Andrew Reid, Staff Writer, Gulf Jobs Market News
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