GCC agreed to impose 5% VAT by 2018. However, this decision must be further approved.
The UAE Ministry of Finance also mentioned that some services will be exempt from VAT such as education and health care.
UAE estimates around Dh 10 to 12 billion revenue for the first year alone.
A day before the decision, Christine Lagarde – Managing Director of the International Monetary Fund – advised Gulf countries to introduce a harmonized VAT rate in order to increase their GDP without depending as much on oil prices, which are unlikely to go back to a $ 100 per barrel until at least 2017.