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.”
