UAE food reserve plans and VAT on agenda at Federal National Council

A draft law for a national food reserve will be discussed, while the finance minister will be asked to assess the impact of value added tax on the country's economy at Tuesday's session

FNC Deputy Speaker Hamad Al Rahoomi. Victor Besa / The National 

The UAE's Minister of State for Financial Affairs, Obaid Al Tayer, will be questioned on the effect of value-added tax on the economy at the Federal National Council on Tuesday – more than two years after the levy was introduced.

The council's deputy speaker, Hamad Al Rahoomi, will call for answers on whether the 5 per cent tax on goods and services has had a "positive or negative" effect.

Other issues on the agenda will include discussions on a new draft law on the UAE's national strategic food reserve and government support for parents of children with intellectual disabilities.

“I am asking if the ministry has studied and evaluated the impact of VAT, now that two years have passed since it came into effect,” said Mr Al Rahoomi.

“Has a study been conducted to measure its impact? Whether positive or negative, its impact should have been measured and we would like to see the results.

“Now I am not in a position to talk about the impact; we are expecting the ministry to have done a study and based on the results of that study we can discuss the issue."

The UAE introduced VAT on January 1, 2018, to pay for public services and continue the shift away from a dependence on oil as a source of revenue.

VAT revenue was far higher than forecast in the first year of implementation, reaching Dh27 billion compared to the government's original projection of Dh12bn, according to government data published in May of last year.

VAT has been a source of debate in council chambers in recent years.

A month before its introduction, FNC member Dr Saeed Al Mutawa asked if the government planned to raise employee salaries to address a rise in living costs.

Mr Al Tayer said at the time there were no plans for such a wage increase.

Last January, the FNC discussed concerns over shop workers not returning small change to customers after the 5 per cent tax was added to the price of products.

During the session, members are expected to pass the draft law on the strategic food reserve after discussing it and proposing amendments.

No details of the new law have been provided ahead of the session.