The United Arab Emirates, seeking to bolster state revenues, is likely to complete the drafting of laws introducing corporate tax and value-added tax in the third quarter of this year, a senior Ministry of Finance official said on Thursday. The draft of the corporate tax law and the value-added tax law has been discussed with the local and federal governments. The authorities were still evaluating the social and economic impact of the laws, but drafting was expected to be finished very soon, within the third quarter of this year. The proposed tax rates or when they might take effect was not specified yet. Introducing corporate tax and VAT in the UAE, which has promoted its low-tax environment to investors, would be a major shift in policy, and politically sensitive. Officials have said in the past that VAT is unlikely to be introduced before other countries adopt it too. Otherwise, the UAE’s competitiveness could be hurt and there might be a surge in smuggling across borders. A ministry report released on Thursday said the UAE cabinet had approved versions of the two draft bills. Last year’s plunge in oil prices has hurt the finances of even wealthy Gulf states such as the UAE, pressing them to consider new ways of raising revenue.
