Saudi Arabia and United Arab Emirates introduce VAT for first time

Value Added Tax (VAT) has been introduced in Saudi Arabia and the United Arab Emirates for the first time. The 5% levy is being applied to the majority of goods and services. Gulf states have long attracted foreign workers with the promise of tax-free living.


But governments want to increase revenue in the face of lower oil prices. The tax kicked in on 1 January in both countries. The UAE estimates that in the first year, VAT income will be around 12 billion dirhams (£2.4bn; $3.3bn).


Petrol and diesel, food, clothes, utility bills and hotel rooms all now have VAT applied. But some outgoings have been made exempt from the tax, or given a zero-tax rating, including medical treatment, financial services and public transport. In Saudi Arabia more than 90% of budget revenues come from the oil industry while in the UAE it is roughly 80%.





UCJ, UNILORIN.