(MENAFN)Value added tax (VAT) will be a stable source of revenue for governments in Gulf countries with a minimum impact on the common man's life, said an industry specialist.
The UAE along with other Gulf countries will introduce VAT for the first time in January 2018 at a standard rate of five per cent.
"The impact of VAT is unlikely to do anything other than be a positive factor for governments. It will provide a stable source of revenue going forward, and one that is not significantly impacted by outside factors," Bruce Hamilton, director of indirect tax at Deloitte Middle East, told Khaleej Times on the sidelines of a one-day seminar on VAT.
It is a revenue source that can easily be amended to address changing economic circumstances, Hamilton said, adding that there should be very little impact on the common man as a result of the introduction of VAT.
He explained: "In fact, the whole reason for introducing VAT in many countries, as in the UAE, is to place the country in a more stable budgetary position so that it can support those in society that are most in need. It is very hard for any country to have a stable budget when one of the fundamentals, such as in oil in the GCC, is an uncertain or fluctuating source of revenue for the government."
The government is likely to use its ability to either zero-rate or exempt many supplies most likely to impact the common man to ensure that the impact of VAT is kept to a minimum.
Essentially, the intentions of most governments when introducing a VAT is to focus more on taxing discretionary spend by consumers, while ensuring that those at the lower end of the spectrum are protected and assisted.
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