VAT Will Attract More Global Investment In UAE

United Arab Emirates (UAE) would be least affected by the imposition of VAT because it is one of the lowest globally compared to countries such as the UK, Switzerland, Germany, Mexico, South Africa and Australia according to a study conducted by Alliance Business Centers Network.The study further revealed that VAT in UK and France was 20 per cent, which is substantially higher than the five per cent implemented in the UAE and Saudi Arabia. With the adoption of VAT in the real estate sector, investors and stakeholders are weighing the impact on market valuations. According to Deloitte, in the UAE, commercial property is clustered in the taxable bracket and therefore the costs of buying or leasing such property are likely to increase. VAT in UAE will contribute to the governments' initiatives for economic diversification and continued improvement of public services to the general public. The implementation of VAT will also provide the government with additional revenue streams that will contribute to the continued provision of high-quality public services which will enhance the performance of other economic activities such as construction, tourism and social infrastructure. Further,the implementation of VAT is expected to increase transparency, considering therigid audit requirements which will require many firms to update their auditing process with the new regulations. This will provide an additional incentive for global institutional investors, sovereign wealth funds, regional asset managers, and pension and insurance companies to explore opportunities in the regional real estate sector.

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