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29 November 2016
By Yasmine Saleh
The general manager of Dubai-based conglomerate Easa Saleh Al Gurg Group (ESAG) believes the United Arab Emirates’ plan to introduce a 5 percent value-added tax (VAT) in 2018 is justified, given the quantity and quality of the public services enjoyed by the country’s residents.
Abdulla Al Gurg told Zawya the proposed tax was low compared to some European countries, where VAT reaches 30 percent, especially when the UAE’s infrastructure and services are if such a high standard.
“Thank God it is not at 30 percent like in Italy and France. It is only 5 percent to contribute back to all those beautiful things our governments are doing for us,” Al Gurg told Zawya in an interview earlier this month.
“I am pro VAT 100 percent. My wife gave birth to four children, they all got born in a public hospital. Whether you are a local or not, you pay a minimum charge and get a decent public service. So healthcare is almost free of charge and as for education, if you go to public schools, it is also free of charge,” added the prominent Emirati businessman.
The economy of the UAE, like most Gulf Arab states, has been negatively affected by the drop in the price of oil, the main source of revenue for most governments in the region. In reaction, most Gulf Arab states have been forced to implement major reductions in their spending, including lowering salaries for government employees and cutting subsidies for residents.
The UAE cut fuel subsidies last year, letting gasoline prices rise by up to 24 percent and the state’s energy minister Suhail bin Mohammed Al Mazroui said last January the UAE would make further cuts in subsidies on energy and electricity. Read more here:
“If I compare my country to any other country, we have beautiful bridges and roads and all the money it (the UAE government) is generating has been poured into our infrastructure. The nice restaurants, hotels, roads, somebody has to pay for all of this and it (the VAT) is only 5 percent.”
The Emirates, the major regional business hub and one of the world’s leading shopping destinations, has always been famous for its glamorous buildings, lavish malls and fancy restaurants. It also has one of the best transportation systems in the GCC, including a wide spread metro network and a tram service, whose first phase cost the government $167 million.
“If I would have seen there is no investments coming from our government, I would have said where would the money go to then? But the government (of the UAE) for example is planning a huge amount of investments,” Al Gurg said.
While some Gulf Arab states, such as Saudi Arabia, have cut spending to cope with budget deficits, following the sharp drop in oil prices, the UAE has maintained spending levels for 2017. Earlier this year, it approved a 48.7 billion dirham ($13.3 billion) federal budget for 2017, almost the same as the 2016 budget of 48.56 billion dirhams.
It also approved a 248 billion dirham federal budget for the next five years. Read more here:
“So where will such money come from?” Al Gurg asked of the spending plans. “It is not coming from oil anymore, so five percent is nothing, they deserve it.”
Click here to read Zawya's full Special Coverage on the introduction of VAT.
© Zawya 2016
By Yasmine Saleh
The general manager of Dubai-based conglomerate Easa Saleh Al Gurg Group (ESAG) believes the United Arab Emirates’ plan to introduce a 5 percent value-added tax (VAT) in 2018 is justified, given the quantity and quality of the public services enjoyed by the country’s residents.
Abdulla Al Gurg told Zawya the proposed tax was low compared to some European countries, where VAT reaches 30 percent, especially when the UAE’s infrastructure and services are if such a high standard.
“Thank God it is not at 30 percent like in Italy and France. It is only 5 percent to contribute back to all those beautiful things our governments are doing for us,” Al Gurg told Zawya in an interview earlier this month.
“I am pro VAT 100 percent. My wife gave birth to four children, they all got born in a public hospital. Whether you are a local or not, you pay a minimum charge and get a decent public service. So healthcare is almost free of charge and as for education, if you go to public schools, it is also free of charge,” added the prominent Emirati businessman.
The economy of the UAE, like most Gulf Arab states, has been negatively affected by the drop in the price of oil, the main source of revenue for most governments in the region. In reaction, most Gulf Arab states have been forced to implement major reductions in their spending, including lowering salaries for government employees and cutting subsidies for residents.
The UAE cut fuel subsidies last year, letting gasoline prices rise by up to 24 percent and the state’s energy minister Suhail bin Mohammed Al Mazroui said last January the UAE would make further cuts in subsidies on energy and electricity. Read more here:
“If I compare my country to any other country, we have beautiful bridges and roads and all the money it (the UAE government) is generating has been poured into our infrastructure. The nice restaurants, hotels, roads, somebody has to pay for all of this and it (the VAT) is only 5 percent.”
The Emirates, the major regional business hub and one of the world’s leading shopping destinations, has always been famous for its glamorous buildings, lavish malls and fancy restaurants. It also has one of the best transportation systems in the GCC, including a wide spread metro network and a tram service, whose first phase cost the government $167 million.
“If I would have seen there is no investments coming from our government, I would have said where would the money go to then? But the government (of the UAE) for example is planning a huge amount of investments,” Al Gurg said.
While some Gulf Arab states, such as Saudi Arabia, have cut spending to cope with budget deficits, following the sharp drop in oil prices, the UAE has maintained spending levels for 2017. Earlier this year, it approved a 48.7 billion dirham ($13.3 billion) federal budget for 2017, almost the same as the 2016 budget of 48.56 billion dirhams.
It also approved a 248 billion dirham federal budget for the next five years. Read more here:
“So where will such money come from?” Al Gurg asked of the spending plans. “It is not coming from oil anymore, so five percent is nothing, they deserve it.”
Click here to read Zawya's full Special Coverage on the introduction of VAT.
© Zawya 2016
