VAT could rake in $1.8bn windfall

* username: rupertbu

The replacement of customs duties with value-added taxes could generate a US$1.8 billion (Dh6.61bn) annual windfall for the government, one of the leading architects of sales taxation in the Gulf says.

A new taxation regime could be in place as early as 2012 if long-standing efforts among Gulf countries to introduce value-added taxes (VATs) bear fruit.

“A 5 per cent value-added tax in the UAE would double the revenues they get from customs duties,” said Ehtisham Ahmad, an adviser to the Prime Minister’s office who led the IMF’s efforts to assess tax options in the Gulf between 2006 and 2008. Customs duties account for about 0.7 per cent of GDP, a prior case study has shown.