Asked when the new system was likely to be implemented, Al Saleh said, “Most likely it will be in early 2009.”

According to the Dubai Customs official, this new indirect tax on goods and services will replace the existing customs duty, which will be phased out as part of free trade pacts tax system the GCC is planning with a number of key trading partners such as India, China and the European Union.

According to Al Saleh, VAT will be set at a lower level than the present customs duties, and the financial impacts on all parties are therefore expected to be minimal.

“The VAT rate will be between three and five percent, less than the current customs duties which is five percent,” he was quoted as saying.

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New mega cement company planned for Middle East, North Africa

Leading Islamic investment bank Gulf Finance House (GFH) has announced that it would set up what could become one of the largest cement companies in the Middle East and North Africa (MENA).

In a deal with an estimated end value of $2 billion, GFH will be collaborating with strategic partners including the Associated Group, Emirates Islamic Bank, Capcorp, and technical partners Holtec and China National Building Material Group Corporation (CNBM) to set up the company, the bank said in a statement here.

To be called CEMENA, the project will comprise multiple plants located across the MENA region. It is estimated that production will begin in 30 months, and the target is to supply 10 percent of the region’s requirements in the future.

“There is a substantial wealth of opportunity in this marketplace,” GFH chairperson Esam Janahi said in the statement.

“Accordingly, we have consolidated a team comprising one of the biggest cement companies in the world, the cream of industry consultants and our own specialist teams to conceive this landmark project which answers the heavy demand in the GCC and MENA, but also offers our investors high returns on their equity,” he added.

The construction boom in the Gulf alone is worth around $2.86 trillion.

The GCC consumes around 62 million tonnes of cement per annum but over the next three to five years this figure is expected to increase by 40 percent, according to GFH.

To meet this demand, CEMENA will operate multiple plants in the MENA region and is planning to enter seven initial markets - UAE, Bahrain, Syria, Jordan, Yemen, Oman and Libya.