Decades of tax-free living are set to come to an end across the GCC when the respective countries, including the UAE, introduce Value Added Tax (VAT) next year.
Set at 5 percent, however, the new levy seems a small figure when compared to the 150 countries already implementing VAT or a similar method of taxation (in the UK, for example, VAT is 20 percent).
VAT will be another source of raising revenues for governments in the GCC and it's estimated that the UAE will generate more than 12 billion dirhams additional revenues in the first year after implementation of this new tax.
GCC countries have decided to implement taxation as part of the governments' efforts to diversify revenues in the context of the sharp decline in oil prices.
The International Monetary Fund has been recommending fiscal consolidation in the GCC through diversification of government revenues and reduction of subsidies.
Below is a useful infographic published by the Federal Tax Authority (FTA) that will help you understand what will be and won't be taxed...
