Coronavirus: UAE will not increase VAT amid pandemic crisis

The Emirates will keep the consumption tax at 5%

Al Wahda Mall in Abu Dhabi has reopened after a temporary closure to limit the spread of the coronavirus. Victor Besa / The National

A KFC outlet at Abu Dhabi's Al Wahda Mall has put up a plastic windsheild to step up safety during the coronavirus pandemic. Victor Besa / The National

Customers are asked not to trial the products at MAC in Abu Dhabi's Al Wahda Mall. Victor Besa / The National

Visitors are asked to follow social-distancing rules while shopping at Al Wahda Mall in Abu Dhabi. Victor Besa / The National

A men's restroom at Al Wahda Mall in Abu Dhabi with a signboard asking not to be used. Victor Besa / The National

An information board for customers on how to pay their bill is displayed at MAC in Abu Dhabi's Al Wahda Mall. Victor Besa / The National

Trial rooms at MAX cloth store in Abu Dhabi's Al Wahda Mall are closed. Victor Besa / The National

A safe distance sign on the escalator at Abu Dhabi's Al Wahda Mall. Victor Besa / The National

Dining tables are spaced at least two meters apart at Abu Dhabi's Al Wahda Mall food court. Victor Besa / The National

Dining tables are spaced at least two meters apart at Abu Dhabi's Al Wahda Mall food court. Victor Besa / The National

Touchscreens of navigation boards are disabled at Abu Dhabi's Al Wahda Mall. Victor Besa / The National

Thermal scanners are installed at the entrance of Al Wahda Mall in Abu Dhabi. Victor Besa / The National

Signboards limiting the number of customers allowed into a store have been put up in Abu Dhabi's Al Wahda Mall. Victor Besa / The National

The UAE has no plans to increase value-added tax in the wake of the coronavirus pandemic that has tipped the global economy into a recession, the finance ministry said.

The government announcement came after Saudi Arabia, the largest economy in the Arab world and biggest oil exporter, said it would triple VAT to 15 per cent in July to shore up its finances amid lower oil prices and the Covid-19 crisis.

"The Ministry of Finance denies that there are currently any plans to raise value-added tax in the UAE, which is currently 5 per cent, and confirms its commitment to achieve the county’s development goals and plans," it said on Twitter on Monday.

The UAE, the second-biggest economy in the Arab world, was the first in the region to launch Dh282 billion (US$76.77bn) in fiscal and monetary support, including a Dh256bn package for banks that provides zero-interest funding and frees up capital to boost lending growth in the country.

The UAE introduced VAT on January 1, 2018, together with other GCC states eager to diversify their economies and reduce their dependence on oil.

The ministry "will reorient the financial resources to prepare for the future and continued growth to ensure the security and safety of the communities," Younis Haji Al Khoori, Undersecretary in the Ministry of Finance, said.

The ministry is reviewing its “financial systems to ensure their readiness to manage the next stage and support all vital sectors", Mr Al Khoori said.

"We are devising several programmes and projects to enhance our ability to continue the development process and to put people as our top priority," he said.

"This is essential to build a secure future and achieve the well-being and stability of our society. 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.”