The introduction and implementation of value-added tax (VAT) on January 1 had brought the UAE into a more sophisticated regulatory and fiscal framework, one that is expected to add some Dh12 billion in new revenues in the current year, and increasing to between Dh18 –20 billion in 2019. Now there’s new clarity on how those extra revenue streams will be allocated across the seven emirates, following a Cabinet meeting on Sunday in Abu Dhabi and a statement from His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.
Seventy per cent of revenues from VAT will be allocated to the emirates themselves, with the remaining portion going to the federal government’s annual budget. That 70 per cent allocation to the emirates represents a huge boost in their revenues, allowing for them to prioritise and allocate funding on projects within their areas. As Shaikh Mohammad pointed out, “Distribution of the VAT revenues aims to achieve better local services, greater community development and broader support for our citizens.”
This is an important step in making sure every level of government has the funds and ability to prioritise projects and development works within their geographical jurisdictions, and allowing those projects to be prioritised. The allocation of 70 per cent of VAT revenues to each emirate will also increase the process of transparency at every level, while making sure too that those who receive and spend those monies are fully accountable. It’s a point that was reiterated by Shaikh Mohammad. “Our goal is to create a bigger push for development projects and services provided to Emiratis. The government will be transparent on the nature of these projects and firm when it comes to controlling the markets to stop price hikes. The government will continue to consult with Emiratis in all matters that serve their interests and ensure a decent life for them,” Shaikh Mohammad said.
The introduction of VAT is part of the UAE government’s ongoing and effective efforts to implement best international practices and policies that serve the national economy, and also ensure that the revenues, financial resources and regulatory frameworks are in place to best serve all and without impacting the welfare and happiness of all Emiratis. By allocated the lion’s share to emirates, the government is also ensuring that all areas of the nation are fine tuned to ensure infrastructure across the board is aligned, cohesive and comprehensive, best-serving the UAE as it embraces the future.