The Oman Secretary General for Tax has recently outlined how it may be the first country to introduce Value Added Tax in the United Arab Emirates.
UAE avoids the implementation of VAT
There have been many discussions down the years about the need to introduce a VAT, consumption tax in the UAE. The region is highly dependent on revenues from oil duties, which can fluctuate wildly with the price of oil. So the introduction of VAT would be a way to smooth out state revenues.
Oman has now indicated that it may be the first, outlining the work of the Gulf Cooperation Council in designing a single VAT regime for the six gulf states of the UAE. Oman has indicated that it will attempt an implementation by 2016. This would include a VAT rate of around 6%. Any new Oman regime could then be rolled into a harmonized UAE regime in the future.
For many foreign businesses importing into the region there would be limited difference and import duties would be swapped into the new VAT, which would then be recoverable in the local VAT return.