The United Arab Emirates government has confirmed it and the five other members of the Gulf Cooperation Council (GCC) will introduce a 5% value-added tax (VAT) in 2018, according to media reports.
UAE finance minister Obaid Humaid Al Tayer made the comments during a joint press conference with International Monetary Fund (IMF) managing director Christine Lagarde on Wednesday.
“Once the framework agreement on implementation of VAT is reached, GCC countries have time from January 1, 2018 to January 1, 2019 to implement VAT,” Gulf News reports Al Tayer as saying.
He went on: “A lot of ground work needs to be done before implementing VAT. The private sector will need time to prepare for complying with tax rules. That is the reason we are giving enough time for all.”
The decision comes after the IMF put considerable pressure on the GCC nations to begin to introduce taxes – starting with a VAT, and gradually moving towards income and corporate taxes. It ends years of resistance by the UAE and the other GCC countries to taxing their residents in any way at all.
The UAE’s fellow members on the GCC are Bahrain, Qatar, Kuwait, Saudi Arabia and Oman.
Reports said the VAT would exclude 100 food items, healthcare and education, and is expected to generate Dh12bn (£2.34bn) in tax revenue for the UAE.
It was not immediately known whether financial services of any kind would incur the new VAT.