VAT would be levied at a higher rate on luxury goods, alcohol, and tobacco. Charles Crowell for The National
VAT would be levied at a higher rate on luxury goods, alcohol, and tobacco. Charles Crowell for The National

UAE Government draws up sales and corporation tax plans



The UAE Government has drawn up plans to introduce both a federal sales tax – or value-added tax (VAT) – and a corporation tax, according to Al Ittihad, the Arabic-language sister paper of The National.

This would make the UAE the first country in the Arabian Gulf to introduce an economy-wide indirect tax on consumption.

VAT would be levied at a higher rate on luxury goods, alcohol, and tobacco. Basic goods and essentials would be exempt from VAT.

“VAT is likely to have an effect on consumer spending because it will immediately push up consumer prices,” said William Jackson, a senior emerging markets economist at Capital Economics. “In the near term, it will act as a drag on growth.”

The government did not specify what the tax rate would be, but the IMF has previously recommended that the UAE set VAT at, or about, 5 per cent.

It is not known when or how the government would introduce VAT. Companies and consumers would be given up to two years to adjust to the new tax rules.

The government also plans to introduce a corporation tax, Al Ittihad reported, but did not provide details. The UAE currently levies corporation tax on foreign banks’ operations in the country.

The Ministry of Finance, which is responsible for federal tax collection and government accounts, said that it had finished drafting laws providing for a federal tax system, in addition to legislation to introduce VAT and corporation tax.

It is likely to be some time before the proposals become law. High-profile legislation must be shuttled between all interested government departments, before it is scrutinised by the Federal National Council, approved by the Federal Supreme Council, and signed by Sheikh Khalifa, the President.

“The draft of the corporate tax law and the value-added tax law has been discussed with the local and federal governments,” Younis Haji Al Khouri, an undersecretary at the Ministry of Finance, said last month.

The move comes as Gulf states address a new era of low oil prices. Oil has fallen from about $115 per barrel in June last year to approximately $50 per barrel now, cutting government revenues by about 20 per cent against 2013 levels.

That has opened up a hole in the UAE’s budget. The country will run a fiscal deficit of 2.3 per cent of spending this year, the IMF estimates.

The IMF has long suggested that the UAE introduce a VAT. In its annual economic study of the country, the fund said that the UAE “should consider raising non-hydrocarbon revenues by introducing a VAT, in coordination with the GCC countries, and broadening corporate income and excise taxes”.

Mr Jackson said the move towards a VAT “reinforces the impression that the UAE is the one Gulf state that is taking fiscal consolidation seriously”.

He added: “It seems that the UAE is taking the most serious steps to increase non-oil sector government revenues of all the Gulf countries.

“The UAE is in a stronger position than other Gulf nations because policymakers have more confidence that country’s private sector is fully functioning and well developed, and because its economy is more diversified away from dependence on oil.” ​

abouyamourn@thenational.ae

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Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
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If your investment decisions are being dictated by emotions such as fear, greed, hope, frustration and boredom, it is time for a rethink, Chris Beauchamp, chief market analyst at online trading platform IG, says.

Greed

Greedy investors trade beyond their means, open more positions than usual or hold on to positions too long to chase an even greater gain. “All too often, they incur a heavy loss and may even wipe out the profit already made.

Tip: Ignore the short-term hype, noise and froth and invest for the long-term plan, based on sound fundamentals.

Fear

The risk of making a loss can cloud decision-making. “This can cause you to close out a position too early, or miss out on a profit by being too afraid to open a trade,” he says.

Tip: Start with a plan, and stick to it. For added security, consider placing stops to reduce any losses and limits to lock in profits.

Hope

While all traders need hope to start trading, excessive optimism can backfire. Too many traders hold on to a losing trade because they believe that it will reverse its trend and become profitable.

Tip: Set realistic goals. Be happy with what you have earned, rather than frustrated by what you could have earned.

Frustration

Traders can get annoyed when the markets have behaved in unexpected ways and generates losses or fails to deliver anticipated gains.

Tip: Accept in advance that asset price movements are completely unpredictable and you will suffer losses at some point. These can be managed, say, by attaching stops and limits to your trades.

Boredom

Too many investors buy and sell because they want something to do. They are trading as entertainment, rather than in the hope of making money. As well as making bad decisions, the extra dealing charges eat into returns.

Tip: Open an online demo account and get your thrills without risking real money.

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Director: Laila Abbas

Starring: Yasmine Al Massri, Clara Khoury, Kamel El Basha, Ashraf Barhoum

Rating: 4/5

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Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
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The flights

Emirates and Etihad fly to Johannesburg or Cape Town daily. Flights cost from about Dh3,325, with a flying time of 8hours and 15 minutes. From there, fly South African Airlines or Air Namibia to Namibia’s Windhoek Hosea Kutako International Airport, for about Dh850. Flying time is 2 hours.

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Wilderness Little Kulala offers stays from £460 (Dh2,135) per person, per night. It is one of seven Wilderness Safari lodges in Namibia; www.wilderness-safaris.com.

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1. Fasting 

2. Prayer 

3. Hajj 

4. Shahada 

5. Zakat 

The Year Earth Changed

Directed by:Tom Beard

Narrated by: Sir David Attenborough

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Rated: 3.5/5
COMPANY PROFILE

Company: Bidzi

● Started: 2024

● Founders: Akshay Dosaj and Asif Rashid

● Based: Dubai, UAE

● Industry: M&A

● Funding size: Bootstrapped

● No of employees: Nine

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How tumultuous protests grew
  • A fuel tax protest by French drivers appealed to wider anti-government sentiment
  • Unlike previous French demonstrations there was no trade union or organised movement involved 
  • Demonstrators responded to online petitions and flooded squares to block traffic
  • At its height there were almost 300,000 on the streets in support
  • Named after the high visibility jackets that drivers must keep in cars 
  • Clashes soon turned violent as thousands fought with police at cordons
  • An estimated two dozen people lost eyes and many others were admitted to hospital 
COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
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Joker: Folie a Deux

Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson

Director: Todd Phillips 

Rating: 2/5

Call of Duty: Black Ops 6

Developer: Treyarch, Raven Software
Publisher:  Activision
Console: PlayStation 4 & 5, Windows, Xbox One & Series X/S
Rating: 3.5/5

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