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DUBAI - Around 5,000 finance and accounting jobs would be generated with the introduction of the Value Added Tax (VAT) in the Gulf region, a tax law expert said on Wednesday.
Paul Drum, Head of Policy at CPA Australia and an expert in taxation laws, in a Dubai tax workshop said that VAT brings good news to current finance and accounting students and graduates as this form of taxation will create ample employment opportunities.
The Unified Agreement for VAT of the Cooperation Council for the Arab States of the Gulf, which was signed by the six member states of the Gulf Cooperation Council, required signatories to enact domestic legislation that would introduce a 5 percent VAT on certain transactions.
Gulf states have been looking at other ways to reduce dependency on oil revenues, as well as create new income streams to fund government services including public health services, public owned or funded schools, parks and transport infrastructure.
It is estimated that the VATs imposition will raise between $7 billion and $21 billion annually — or between 0.5 percent and 1.5 percent of regional GDP.
The IMF has said the returns could reach around 2 percent of regions output.
Arabia and the UAE are expected to be the first Arabian Gulf countries to introduce the GCC-wide VAT on January 1, 2018, while other member states Kuwait, Qatar, Bahrain, and Oman have committed to implement their own VAT taxation by next year.
The UAE will apply a VAT rate of 5 percent on taxable supplies which is very low in comparison to the average tax rate of 19 percent globally. However, not everything will be charged VAT as the law makes provision for zero rated and tax exempted goods and services to ensure that the impact of VAT on consumers is kept to a minimum, Drum said.
Among the goods and service that would be subjected to VAT include electronics, smartphones, cars, jewelry, certain beverages, financial and accounting services, legal services, dining out and entertainment.
Certain services and goods such as nearly 100 food items, basic health services, transport and public education will be exempted from VAT.
The UAE has separately started to collect excise taxes at a rate of 100 percent on tobacco and energy drinks and 50 percent on fizzy drinks on October 1.
Paul Drum, Head of Policy at CPA Australia and an expert in taxation laws, in a Dubai tax workshop said that VAT brings good news to current finance and accounting students and graduates as this form of taxation will create ample employment opportunities.
The Unified Agreement for VAT of the Cooperation Council for the Arab States of the Gulf, which was signed by the six member states of the Gulf Cooperation Council, required signatories to enact domestic legislation that would introduce a 5 percent VAT on certain transactions.
Gulf states have been looking at other ways to reduce dependency on oil revenues, as well as create new income streams to fund government services including public health services, public owned or funded schools, parks and transport infrastructure.
It is estimated that the VATs imposition will raise between $7 billion and $21 billion annually — or between 0.5 percent and 1.5 percent of regional GDP.
The IMF has said the returns could reach around 2 percent of regions output.
Arabia and the UAE are expected to be the first Arabian Gulf countries to introduce the GCC-wide VAT on January 1, 2018, while other member states Kuwait, Qatar, Bahrain, and Oman have committed to implement their own VAT taxation by next year.
The UAE will apply a VAT rate of 5 percent on taxable supplies which is very low in comparison to the average tax rate of 19 percent globally. However, not everything will be charged VAT as the law makes provision for zero rated and tax exempted goods and services to ensure that the impact of VAT on consumers is kept to a minimum, Drum said.
Among the goods and service that would be subjected to VAT include electronics, smartphones, cars, jewelry, certain beverages, financial and accounting services, legal services, dining out and entertainment.
Certain services and goods such as nearly 100 food items, basic health services, transport and public education will be exempted from VAT.
The UAE has separately started to collect excise taxes at a rate of 100 percent on tobacco and energy drinks and 50 percent on fizzy drinks on October 1.
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