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Gulf states to lose tax-free reputation

This article is more than 12 months old

DUBAI Hard hit by a drop in oil income, energy-rich Gulf states will next year introduce value-added tax (VAT) to a region long known for being tax-free.

Some have hailed introducing VAT as the start of "exciting, dramatic" change in the region, but the measure is also expected to push prices up for all residents, including citizens and low-income workers.

Yesterday, the United Arab Emirates doubled the price of tobacco and increased soft drink prices by 50 per cent, ahead of the more general VAT on goods and services from Jan 1.

The UAE is one of the six Gulf Cooperation Council states to have agreed to introduce VAT at 5 per cent next year as they seek to revitalise their economies.

The UAE and Saudi Arabia have said they will implement VAT from Jan 1 while the other GCC states - Bahrain, Kuwait, Oman and Qatar - are expected to follow suit during the year. - AFP

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