By: Mahmoud Gamal
Dubai – Mubasher: The UAE stock markets will implement the 5% value-added tax (VAT) on trading commissions after the New Year holiday.
The Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX) have announced weeks ago the introduction of the VAT, starting from 1 January 2018 on the current fees of goods and services.
The VAT is forecast to positively impact the financial and economic performance of the UAE, CEO of ADX Rashid Al Baloushi said.
The VAT will not affect the stock markets and the business environment in the UAE, Al Baloushi previously highlighted in a statement on the ADX’s official website.
Limited impact
The VAT’s impact on traders of the UAE stock markets will be limited as the 5% tax will be only levied on selling and buying commissions, managing director of asset management at Menacorp Tariq Qaqish said.
The limited negative impact on the listed firms will wear off on the medium term in light of the anticipated increase in the government’s revenues, Qaqish added.
Introducing VAT on the UAE bourses will push firms to change some strategies in the long term, he said.
The new tax has limited effects on consumers in the UAE in general, Qaqish noted, forecasting them to adapt it.
Positive results
Moreover, financial analyst at Menacorp Financial Services Essam Kassabia said that VAT would boost the UAE’s revenues and would positively impact the private sector.
This positive impact is likely to show when the country re-pump VAT revenues into projects by listed-firms, Kassabia highlighted.
The UAE is expected to allocate VAT revenues of AED 10 billion to AED 12 billion ($2.7-$3.2 billion) in the first year of VAT introduction on major goods and services, excluding 100 essential commodities.
Economy growth
The new tax will help to grow the UAE’s economy and diminishing its dependence on oil, financial analyst Razan Shahwan told Mubasher.
Diversifying sources of income will positively affect firms in the UAE, Shahwan pointed out.
The UAE has applied 5% VAT to the majority of goods and services, including petrol and diesel, food, clothes, utility bills and hotel rooms, starting from Monday, 1 January.
Translated by: Mai Ezz El-Din
