Abu Dhabi: The UAE is not planning to start taxing individual incomes in the UAE, a minister of state said on Tuesday.
“There is no intention and no plans to impose taxes on the income of individuals in the UAE,”, Obaid Humaid Al Tayer, Minister of State for Financial Affairs, told reporters at the Federal National Council on Tuesday.
Al Tayer also dismissed any plans to impose taxes on remittances.
“The Government may not proceed with such a significant move before they are thoroughly studied in terms of their socioeconomic impacts.”
He added that there were studies in their initial stages, but there was no decision taken, nor a draft law made.
“Any studies will take into account the amount of these remittances and the socioeconomic impact on the UAE’s economy and foreign workers,” Al Tayer said.
However, the government is considering introducing corporate taxes, Al Tayer said.
“We are still studying the corporate tax law, which is still in its initial stages and it’s being discussed with local governments and no agreement has been reached so far.”
A value-added tax (VAT) is also being discussed at the GCC level, Al Tayer said. If an agreement is reached by the beginning of next year, it may be implemented in 2018 or 2019.
“The tax takes at least 18 months to be implemented. We need to determine which goods and services are taxed and which are zero-rated. The private sector also needs time and the government needs to take certain measures,” Al Tayer said.
Al Tayer was speaking after the Federal National Council passed the UAE’s federal budget of Dh46 billion for 2016.
The 2016 budget was approved as part of a three-year federal spending plan of Dh140 billion for 2014-2016. The balanced budget has revenues and expenditure of Dh48.557 billion.
The members said allocations for education and health would be increased to boost the two sectors and provide health insurance to every citizen according to the 2013 Cabinet retreat led by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.
The 2016 federal government budget gives priority to services that touch the lives of the people and more than 50 per cent of the budget has been allocated to sectors such as education, social development, public services and health.
While education received the maximum allocation of Dh6.048 billion, Dh3.9 billion was allocated for health, while the social affairs sector was allocated Dh3.017 billion.
Al Tayer stressed that the budget was responsive to any new initiatives and programmes once endorsed by the Cabinet.