20/09/2018 07:56 AST

The introduction of VAT in the UAE may raise up to 1.7 per cent of the country’s gross domestic product, the rating agency Moody’s said. “The implementation of VAT in the UAE marks a positive step towards revenue diversification,” said Thaddeus Best, a Moody’s analyst and co-author of the report.

The UAE’s 5 per cent VAT on goods and services introduced on January 1, may raise up to Dh24 billion per year in additional revenues for the country although take-up is likely to be lower in the first few years, Mr Best said.

Under VAT rules, the federal government will retain 30 per cent of the revenues, with the rest distributed across the emirates, according to an yet to be announced sharing formula.

“Depending on the structure of the formula, it could potentially have redistributive effects for the less wealthy emirates such as Sharjah,” the report said. However, this would be an indirect outcome, it added.

VAT implementation has had only a “modest” impact on inflation, the agency said and any inflationary impact on household purchasing power has been mitigated by zero-rated and exempt items (such as certain educational, healthcare and transport services in the country as well as the first sale or rent of residential buildings), and by deflationary trends in the real estate market.

Moody’s said the exemptions and zero ratings announced by the government this year had a minimal inflationary impact on sectors such as health care, education and housing. Price increases in sectors such as transportation were also “relatively benign”.

A draft law under consideration to introduce federal-level debt issuance “would not represent a significant shift in the fiscal structure of the UAE”, the report added. The main beneficiary would be the local banking sector, which would receive a stable supply of high-quality liquid assets.


The National

Ticker Price Volume
QNBK 183.41 314,625
APPC 47.90 363,668
SAICO 10.80 239,189
SISCO 12.18 444,816
STC 83.00 679,256
ALMARAI 46.00 523,605
KAYAN 15.50 7,407,695
Saudi Arabia’s GDP projected to jump 30% by 2023: IMF

18/10/2018

Saudi Arabia’s gross domestic product (GDP) is expected to jump 29.53 percent to $889.5 billion by the year 2023 while comparing with the year 2017. The GDP is projected to increase 12.11 percent to

Saudi Gazette

Bahrain tops World Bank Index for Human Capital in MENA

18/10/2018

The World Bank has announced its inaugural Human Capital Index, with Bahrain coming in the lead for the MENA region. Focusing on health and education, the Index measures how productive a child born t

Saudi Gazette

Dubai residential property prices drop 7.7% in September

18/10/2018

Real estate rental and sales prices continued to decline across much of the UAE last month as the fight for affordability persists, new data shows. Average residential sales prices in Dubai decrease

The National

S&P reaffirms 'A-' rating for Oman Insurance Company

18/10/2018

Rating agency S&P has reaffirmed the A- Stable rating for Oman Insurance Company (OIC), an important insurance player in the Gulf Cooperation Council (GCC).

It is one of the UAE’s leading

Times of Oman

Sezad woos business community in US

18/10/2018

The Special Economic Zone Authority of Duqm (Sezad) highlighted the investment opportunities available in Duqm to the business community in Washington through several meetings with American companies

Times of Oman