Dubai - Mubasher: The United Arab Emirates economy is expected to recover gradually next year without suffering a significant blow to growth from the introduction of a 5% value-added tax (VAT) in January, according to the International Monetary Fund (IMF).
The IMF mission chief to the UAE, Natalia Tamirisa said that Dubai’s spending on preparations to host the Expo 2020 world’s fair would help to boost growth, as reported by Reuters on Monday.
“We see a gradual recovery for the UAE over the next few years on the back of firming oil prices, a pick-up in global trade, investment for Expo 2020 and easing fiscal consolidation,” Tamirisa told the news agency.
The Emirati non-oil sector growth is projected to rise from 1.9% this year to 2.8% next year, and to continue climbing to between 3.3$ and 3.5% in 2020, she indicated.
The introduction of VAT next month will be a big change for consumers and companies, which have long been accustomed to minimal taxation in the Gulf.
“After the initial adjustment we’re expecting smooth operation of the system. The preparations by the government have been quite extensive,” Tamirisa noted when asked about the introduction of the VAT early next year.
UAE’s consolidated fiscal deficit is expected to decline to 1.3% of the country’s gross domestic product (GDP) in the upcoming year, and then gradually disappear in subsequent years.
