Stop spreading rumours on UAE income tax, warns Ministry of Finance

Dubai: A senior official at the Ministry of Finance has refuted unverified news about a new income tax that will be imposed in the UAE.

This past week, social networking sites were flooded with queries from residents who were confused about the alleged upcoming introduction of direct taxes and plans to increase value added tax (VAT).

“There are no plans or decisions to raise VAT or impose new taxes in the near future. There is no validity [in the rumours] on direct taxes or increasing VAT,” said Younis Haji Al Khouri, Undersecretary of Ministry of Finance, who was quoted by Arabic media on Thursday.

"Since the introduction of the VAT, it was decided that there will be no increases to the VAT rate for 5 years, after which the matter will be reviewed and an appropriate decision taken," said Al Khoury.

VAT was introduced in the UAE on 1 January 2018 at a rate of 5 per cent. The VAT aims to provide the UAE with a new source of income which will be continued to be utilised to provide high-quality public services. It also intends to help the government move towards its vision of reducing dependence on oil and other resources as a source of revenue.

The number of businesses that registered for VAT during the first year of implementation reached at least 296,000 companies and tax groups, while tax returns exceeded 650,000.

During the first year of VAT, the authority responded to more than 306,500 phone calls about the tax system, while another 147,000 were answered by e-mail. The total number of queries answered by the Federal tax Authority (FTA) exceeded 453,500.