IMF says UAE’s VAT introduction has gone well, impact short-lived

 

The United Arab Emirates’ introduction of value-added tax has gone smoothly and inflation, having jumped in response, will moderate, the head of the International Monetary Fund’s mission to the country said on Thursday.

Natalia Tamirisa said the 5 per cent VAT rate imposed at the start of this year was a big cultural and administrative shift in a country that has traditionally had minimal taxation.

“Given the challenges, VAT introduction has been well managed and relatively smooth,” she told Reuters after a visit to the UAE for talks with authorities.

Annual consumer price inflation jumped to 4.8 per cent in January, the highest since 2015, but dropped back to 3.4 per cent in March. Tamirisa said the latest data suggested the impact of the tax would be short-lived, partly because inflation had dropped in areas of the economy not covered by VAT.

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