Injecting new government investments will lessen VAT impact on business: study
The Alliance Business Centres Network, ABCN, has affirmed that the UAE is the least affected globally and regionally when it comes to imposing the value added tax, VAT, on business sectors, which makes its investment environment constantly competitive for all sectors.
A recent study conducted by the group showed that the UAE has the lowest VAT regionally and globally, compared to countries such as UK, Switzerland, Germany, Mexico, South Africa and Australia. The UAE VAT rate is also the lowest among the Arab countries that apply this tax.
The study, which compared between the UAE and a number of countries around the world, revealed that the VAT in UK and France was 20%, Germany 19%, China 17%, Mexico 16%, South Africa 14%, Australia 10% and Switzerland 8%. This means that the UAE is one of the world's lowest countries in terms of imposing taxes.
The study showed that Taiwan imposes one of the lowest VAT rates at 5%, followed by Singapore at 7%, whereas the VAT soars up to 27% in Hungary, 25% in Denmark, 22% in Italy, 21% in Spain and 18% in Turkey.
In the Arab countries, the study showed that Tunisia imposes the highest VAT at 18%, Algeria between 7% and 17%, Egypt at 14 % and Lebanon at 10%.
The study valued the Cabinet's recent decision to allocate 70% of the country's value added tax revenues to local governments, thereby enhancing their ability to invest in new development projects.
The study ruled out the possibility for the VAT to have any negative effects on Expo 2020 Dubai plans and projects, stressing that these projects have opened up sustainable investment areas for the UAE in all investment and service sectors.
It emphasised that compared to the countries of the region, the UAE proved to be the best when it comes to trust in investments and the availability of comparative advantages that contribute to business growth, especially in terms of infrastructure, transparency, imposition of no income tax and tight investment regulating legislation.
Data analysis pointed out that the federal and local budgets announced for 2018 prove that government spending on development is increasing, which encourages the business sectors to continue to grow through investment expansion, since the UAE offers a large number of incentives to encourage the growth and sustainability of business. Advanced infrastructure, services, free zones, logistics and robust financial system are some examples to name the few.
The study showed that all the federal and local budgets announced for 2018 confirmed that government spending on development was on the increase, thereby encouraging the business sectors to keep growing. The UAE also provides many incentives that encourage business growth and sustainability, backed by sophisticated infrastructure, services, free zones, logistics and robust financial system, the study added.
Since the establishment of the UAE, the government has provided unlimited support to all business sectors, thus offering significant opportunities to foundations and companies to grow and expand both inside and outside the UAE, the study indicated.
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