"The date is set for levying VAT from January 1, 2018, and the government is ready for VAT," minister Obaid Humaid Al Tayer said during a session of the Federal National Council (FNC), held in its headquarters. During the session chaired by FNC Speaker Dr Amal Al Qubaisi, council members raised concerns over the readiness of businesses for VAT, and the impact of VAT on the overall national economy to the minister.
"The imposition of value added tax is a historic step forward," said the minister, adding that it is a step forward towards achieving "financial stability".
However, a statement by the Chairman of UAE Banks Federation, Abdul Aziz Abdulla Al Ghurair, revealed the concerns that banks in the UAE had over the VAT, highlighting that banks are not ready and require a six-month extension.
"The government does not like to postpone anything, so it's impossible to exempt anyone from the tax. There will not be any favours given to anyone," said the minister.
The minister said businesses and banks have been informed about the VAT since the GCC signed the VAT agreement back in December 2015.
"There is no surprise that we are implementing the VAT."
Moreover, he said the VAT will have "a minor impact" on consumers as well as investors in the UAE.
He noted the social impact expected from its application "varies from person to person," but will not exceed 1.4 per cent annually.
"If an individual would spend Dh5,000 a month, they will be affected only by Dh70."
Al Tayer pointed out that VAT will impact the GDP by 0.42 per cent in the first year, but will go down to 0.11 per cent in the medium term, and will continue to shrink as the economy grows.
He also said the impact of VAT on investments is very limited and will not exceed 0.68 per cent.
He stressed that the implementation of tax is part of the diversification of the state revenues, adding that it aims to reach financial stability and is part of the government plan to diversity its source of income.
"We conducted three studies to measure the impact of this tax on society over 10 years through specialised international companies in 2007, 2010 and 2015, and the implications for 2016," said the minister.
Regarding the impact on VAT on small and medium-sized businesses, he said these entities must now study their accounts and regulate their work more often.
"We should look at this from a positive view point, because companies will now be more in the clear."
However, when FNC member Hamad Al Rahoomi asked Al Tayer about the number of businesses already registered with VAT, the minister did not have an answer.
Meanwhile, on the sidelines of the FNC session, the minister was asked about the concerns being faced by businesses regarding the smoothness of the VAT process. "The answer is already out there," said Al Tayer. He pointed out that the government is ready for VAT and when asked about the readiness of businesses across the country, he said: "The responsibility is in their own hands."
Also during Tuesday's session, the council passed the draft law for the 2018 budget, which totals up to Dh51.4 billion.
Copyright © 2017 Khaleej Times. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).