Minister on VAT: 'No delay on January 1 - and no favours to anyone'

The National -- The UAE has no plans to delay the introduction of Value Added Tax - and there will "no favours given to anyone", the Minister of State for Financial Affairs said.

Obaid Al Tayer told members of the Federal National Council on Tuesday that VAT, which comes into effect on January 1, will have a minor effect on investors and consumers.

Overall consumer prices should increase no more than 1.4 per cent, he said, adding that the figure for investors should be no more than 0.68 per cent.

“So if a person spends Dh5,000 a month, it will only affect them by Dh70, and if he spends Dh10,000 a month, it will affect him by Dh140.

He added that all banks and private companies have been kept in the loop about the upcoming levy since the GCC agreement to apply it was signed in December 2015.

“It is not a surprise that we will be adding VAT," he said.

Moreover, he asked the FNC's legal adviser to read article 5 from the constitution, which shows that the government is responsible to implement laws without delay.

“The government does not like to postpone anything, so it is not possible to pardon any party from implementing the taxes law, and there will be no favours given to anyone,” said the minister.

He was responding to concerns voiced by FNC members regarding a statement made by last month Abdul Aziz Abdulla Al Ghurair, chairman of UAE Banks Federation, when he said banks and insurers are not ready to apply VAT.

“We call to postpone implementing the VAT to give time to all the sectors to implement it correctly, whether in banking, insurance, or other sectors," he told reporters in November.

Also on Tuesday, FNC members asked the government to look at increasing salaries for public sector employees to offset the cost of VAT.