No plans to introduce income tax in the UAE, confirms government official

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VAT will also remain at 5 per cent for at least the next three years…

After a local newspaper article sparked a social media debate about tax in the UAE, a senior government official has confirmed that there are no plans to introduce income tax in the region.

VAT charges will also not face increases in the next three years, Younis Al Khouri, undersecretary at the Ministry of Finance said.

According to The National, Al Khouri told Arabic language media that “There are no plans or decisions to raise VAT or impose new taxes in the near future. There is no validity [in the suggestion] on direct taxes or increasing VAT.”

He further added that, “Since the introduction of the VAT, it was decided that there will be no increases to the VAT rate for 5 years, after which the matter will be reviewed and an appropriate decision taken.”

 

The UAE and Saudi Arabia introduced a 5 per cent VAT on an array of goods in January 2018, but confirmed at the time that it would remain at 5 per cent until 2023.

In 2018, VAT in the UAE produced a total revenue of Dhs27 billion, surpassing the initial projection of Dhs12 billion by more than double.

In October 2017, an excise tax was also introduced, increasing the price of energy drinks and tobacco by 100 per cent, and fizzy drinks by 50 per cent. As of December 1, 2019, further “harmful” products will be added to the UAE’s excise tax list. This will see electronic smoking devices, and the liquids used in them, hit with a 100 per cent tax, while soft drinks containing added sugar and sweeteners will be subject to a 50 per cent tax.

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Images: Getty