''In four to five years VAT should be in all GCC countries,"
All GCC countries will have value added tax (VAT) within five years, a senior Dubai Customs official said on Thursday.
Speaking to local radio station Dubai Eye, Dubai Customs Executive Director Abdul Rahman Al-Saleh also said the UAE was expected to introduce the tax sometime next year, without being any more specific.
"It could be that if we or any other GCC country is ready, they can start [to introduce VAT], but the target is that in four to five years VAT should be in all GCC countries," Al-Saleh said.
"We [the UAE] envisage the implementation sometime in 2009 but I cannot tell you the month yet."
Al-Saleh told Dubai Eye it was inevitable VAT would be introduced, stating it was only a “matter of time”.
He said the exact date of its introduction would be announced by the federal government, but did not know when that would be.
The tax, which will replace customs duties to be phased out under free trade agreements, is likely to be set at a flat rate of between 3% and 5% and would be applied to all goods and services.
Small businesses with revenues under $1 million will be exempt from the tax, according to a statement by Dubai Customs on Tuesday, and companies within the health and education sectors could also be exempt, Al-Saleh said.
News of the introduction of VAT has raised fears that the UAE will become a less attractive place to work and do business.
Al-Saleh denied this, stating that VAT was replacing customs duties and was being introduced at a very low rate.
He also said that the introduction would not at to inflation, which likely accelerated to a 20-year peak of 11.4% last year and will rise slightly to 11.8% this year, according to a recent poll of analysts.
“[I have] no concern that the UAE will be perceived as less attractive for doing business, we have been looking at inflation and our conclusion is that VAT will not cause any inflation," Al-Saleh said.
"The VAT is being introduced to replace customs duties. We are targeting a very low rate of tax compared to an average of 20% in Europe.
"This is the best time to introduce VAT because the government can introduce it at very low rate because of its oil income."
Al-Saleh said on Tuesday at trade expo Arabian Travel Market (ATM) that the UAE would have the infrastructure in place for a VAT system by the end of this year.
Speaking to local radio station Dubai Eye, Dubai Customs Executive Director Abdul Rahman Al-Saleh also said the UAE was expected to introduce the tax sometime next year, without being any more specific.
"It could be that if we or any other GCC country is ready, they can start [to introduce VAT], but the target is that in four to five years VAT should be in all GCC countries," Al-Saleh said.
"We [the UAE] envisage the implementation sometime in 2009 but I cannot tell you the month yet."
Al-Saleh told Dubai Eye it was inevitable VAT would be introduced, stating it was only a “matter of time”.
He said the exact date of its introduction would be announced by the federal government, but did not know when that would be.
The tax, which will replace customs duties to be phased out under free trade agreements, is likely to be set at a flat rate of between 3% and 5% and would be applied to all goods and services.
Small businesses with revenues under $1 million will be exempt from the tax, according to a statement by Dubai Customs on Tuesday, and companies within the health and education sectors could also be exempt, Al-Saleh said.
News of the introduction of VAT has raised fears that the UAE will become a less attractive place to work and do business.
Al-Saleh denied this, stating that VAT was replacing customs duties and was being introduced at a very low rate.
He also said that the introduction would not at to inflation, which likely accelerated to a 20-year peak of 11.4% last year and will rise slightly to 11.8% this year, according to a recent poll of analysts.
“[I have] no concern that the UAE will be perceived as less attractive for doing business, we have been looking at inflation and our conclusion is that VAT will not cause any inflation," Al-Saleh said.
"The VAT is being introduced to replace customs duties. We are targeting a very low rate of tax compared to an average of 20% in Europe.
"This is the best time to introduce VAT because the government can introduce it at very low rate because of its oil income."
Al-Saleh said on Tuesday at trade expo Arabian Travel Market (ATM) that the UAE would have the infrastructure in place for a VAT system by the end of this year.
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