Dubai Customs is well advanced with its studies into the introduction of value-added tax (VAT) in the UAE.

Dubai Customs Executive Director Mr. Abdul Rahman Al Saleh told a seminar at the Arabian Travel Market in Dubai that his Department has been commissioned to study the VAT project and has been working over the past two years to develop a VAT system that could be applied across the emirates and expects to have the infrastructure in place by the final quarter of 2008 for implementation.

A team of specialised UAE nationals have been driving the project in consultation with international experts.
However, he stressed that the decision about when exactly VAT should be introduced in the UAE was one to be made by higher authorities.

The UAE has to phase out customs duties as part of the Free Trade Agreements it was signing with a number of its major trading partners and VAT is being considered to replace this lost revenue source for further investments in health, education and public infrastructural needs, which will benefit UAE nationals, expatriates and tourists.

The International Monetary Fund (IMF) is backing the UAE on this initiative, he said in a statement.

VAT is considered one of the healthiest forms of taxation and has been adopted by most leading economies of the world. It is now in use in more than 140 nations, after being first introduced in France 52 years ago.

The seminar was told that VAT is expected to be a single rate between three and five per cent, with a high threshold set for registration to exempt small businesses.

Tourists would also be able to claim back the VAT they pay on purchases over a certain amount under the current proposals, according to statement. – TradeArabia News Service