UAE value added tax likely in a year

UAE value added tax likely in a year
By Saifur Rahman, Business News Editor Published: November 22, 2007, 21:50 GULF NEWS

Dubai: The UAE could implement Value Added Tax (VAT) "in a year's time", which could be supervised by a new federal authority, a government official said.

"We are currently carrying out various studies on the implementation of VAT in a year's time," Abdul Rahman Al Saleh, executive director for Corporate Affairs at Dubai Customs, told Gulf News on Thursday.

Dubai Customs recently launched the second phase of the VAT Study Project that includes the transition to the implementation stage of the plan. "This phase will also include the completion of the legal aspects and the groundwork of its infrastructure, especially the collection of taxes," a Dubai Customs statement said.

Al Saleh said: "The business size that defines the classification of taxpayer companies is being studied, as small companies will be exempted."

Dubai Customs handles 80 per cent of the UAE's Dh858.65 billion foreign trade, including Dh510 billion exports and Dh348.65 billion imports, of which a large chunk is either re-exported or consumed locally.

It is, however, not clear how VAT would be collected across the country.

"We are weighing various options. A new federal authority could be formed to oversee the VAT collection process or the customs could collect at entry," Al Saleh said.

"We will go with the international best practice that are employed in some of the 140 countries where VAT has been implemented," he added.