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“VAT
will not be an alternative to the present customs
tariffs, which exempt many items and all products
manufactured
in
the GCC,” said Said bin Khalifa Al Mirri, Deputy
Director-General of the UAE Federal Customs Authority.
“These
products will be subject to VAT when it is introduced.
“The
main reason for introducing VAT is that the GCC countries
are entering into free trade agreements with other states,
which want such taxes to be enforced.
“But the question now is how VAT will affect our
economies, especially at this stage when all GCC nations
are suffering from rising inflation. For this reason I
don’t expect VAT to be enforced this year.”
The GCC states – the UAE, Saudi Arabia, Bahrain,
Qatar, Kuwait and Oman – are planning to impose VAT in
line with their 2003 customs union and the common market
that was launched early this year.
Committees have been created to draw up the necessary
frameworks and legislation in co-operation with the
International Monetary Fund (IMF), which is advising
local customs authorities through the GCC secretariat.
The UAE Ministry of Finance has been given the task of
preparing a draft VAT law.
“A tax of this kind requres a huge administrative
system to manage and control it, whether in the UAE
or in the other GCC states,” Al Mirri told the Qatari
Al Sharq Arabic language daily.
But Al Mirri said most of the obstacles that have
blocked the signing of a GCC agreement on sharing
customs revenues had been removed.
Source
: Emirates Business 24/7 - Dubai, Dubai, United Arab
Emirates, dated 19/02/2008
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