Ministers meet on value added tax issue

Talks on the objections of the Minister of Economy to the planned introduction of value added tax (VAT) were due to be held late last night at a high-level meeting. The matter was to be discussed by Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance and Chairman of the Federal Customs Authority, and Obaid Humaid Al Tayer, Minister of State for Financial and Industrial Affairs.

Sources said the issue would be referred to the Cabinet for discussion and would also be considered by the Federal National Council.

Sultan bin Saeed Al Mansouri, Minister of Economy, had protested against the VAT scheme, saying the UAE was party to several economic and free-trade agreements with GCC members and other Arab and Western countries. He said VAT would hinder UAE trade with those countries and add inflationary burdens.

Financial, trade and investment figures have said the implementation of VAT would lead to the loss of many privileges that attracted investments to the UAE. FNC member Yousef Obaid bin Essa Al Neaimi set out two main arguments against VAT. The first was that the UAE would lose the market openness and the benefit of absence of tax on revenues. The second concerned multiple customs outlets in the UAE and the difficulty of calculating the share of VAT proceeds due to each emirate.