UAE says has no plan for now to increase VAT

DUBAI: The United Arab Emirates has no plan to increase value-added tax (VAT) to more than the current 5%, the ministry of finance said on Tuesday.

All six Gulf Arab states agreed to introduce 5% VAT in 2018 after a slump in oil prices hit their revenues.

Saudi Arabia, the United Arab Emirates and Bahrain have already introduced the tax, with Riyadh tripling it this year. Oman said last month it plans to launch it in April.

"There are no plans or decisions at the moment to raise VAT to more than 5% in the UAE," the ministry of finance said in a statement.

Between January and August, the UAE collected 11.6 billion dirhams ($3.16 billion) in total VAT revenue, the ministry said, adding that 30% of that will be distributed to the federal government and 70% to local governments.

"Tax revenues contribute to the continued implementation of development projects in accordance with the UAE government's plans, and to mitigating the repercussions of the COVID-19 pandemic," it said.

The International Monetary Fund estimates the UAE will face a 6.6% economic contraction this year, as the coronavirus crisis hit vital economic sectors such as tourism and transportation.