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Dubai – UAE

Purpose of VAT Imposition in UAE, GCC

2 min read

The global economy is heading for trying times as more countries are shifting their reliance on taxes for revenue generation than earning revenues from their fossil fuel reserves. The Gulf region once was the paradise for tax-free habitants, but it is changing forever right at the start of the Year 2018. The government of United Arab Emirates and other members of Gulf Cooperation Council (GCC) have decided to implement a 5 percent Value Added Tax from January 1, 2018. The VAT consultants in Dubai are honing up their skills and knowledge to deal with the reflex impact of the new regulation, which has sent waves of anxiety among the expats living and working in the region.


Although, the government has decided to impose 5 percent VAT on various items and services, there is another list of exempted items which has 94 food products, and bills like school fees and healthcare bills. It all means that there is no need to panic just yet. VAT imposition at 5 percent will not really spiral your household expenditure but there will be a moderate or small surge in the expenses, which can be handled properly by getting the right information and advice from the taxation officials in Dubai.


As per the experts, the Dubai government has imposed the levy to deliver on the long-standing plans for economic diversification away from the oil-centric economy. At the same time the rulers also want to live up to their words on the delivery of social economic programs. The UAE government is expected to raise 12 billion UAE Dirhams in the first year of the VAT imposition, which is likely to surge up to 20 billion UAE dirhams during the next year. This new source of income was the order of the day for the UAE rulers their reliance on oil reserves was not generating enough financial resources to keep up the economic momentum, especially with an eye on the Expo 2020. This extra income resource will help the government to ensure a more stable economy, which will contribute to the quality of public services. The UAE government is one of the most ambitious governments in the world and is likely to spend trillions of dollars on infrastructure projects in the next 10 to 25 years, so this extra income generation avenue will help it achieve its economic and development goals. Read more to find out more on the subject.