UAE not to hike VAT rates and follow Saudi move

Dubai: The UAE has no plans to increase its VAT (value-added tax) rate, according to Younis Haji Al Khouri, under-secretary in the Finance Ministry, after Saudi Arabia confirmed it would go in for a hike.

According to Al Khoori, “The ministry’s current focus is to work with all government entities based on the guidance of the wise leadership to assess the priorities for the post COVID-19 stage. The ministry will reorient the financial resources to prepare for the future and continued growth to ensure the security and safety of the communities.

“The UAE has always been keen to take precautionary measures and launch financial initiatives, which protect the national economy and support various business sectors in the country.”

Even prior to the ministry confirmation, business sources were hopeful that the UAE would not opt for a rate hike now. “In fact, we are hoping there would be a six-month deferment of VAT payments, until business levels stabilize and consumer confidence returns,” said Abdul Salam K.P., a member of the Dubai Gold & Jewellery Group.

Saudi Arabia on Monday said it would raise VAT to 15 per cent from 5 per cent from July 1, seeking to shield finances hit by low oil prices and a slump in demand for its lifeline export worsened by the new coronavirus.

Younis Haji Al Khouri said: “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.