The statement issued by the IMF following the conclusion of its Article IV consultation with the UAE on 20 July says corporation tax is a possibility and called for further action to eliminate energy subsidies.
“Directors encouraged the authorities to diversify revenues and rationalize current spending, while further strengthening public financial management,” the IMF said. “They welcomed the plans to introduce a VAT and increase excise taxes, which could be followed by a corporate income tax. Directors also recommended phasing out remaining energy subsidies, while protecting the vulnerable.”
The statement said that GDP will hold steady at around $370bn in 2016 despite a further fall in oil prices in the year. It forecast that the average price of UAE oil exports will be 14 per cent lower in 2016 at $45.3 a barrel. Crude oil production is forecast to average 3m barrels a day (b/d) this year compared with 2.8m b/d in 2015. The current account surplus is forecast to fall by more than half in 2016 to $5.3bn.
The IMF called for further action to reduce the overall UAE fiscal deficit.
The IMF forecasts that UAE GDP will rise by 8 per cent in 2017 on oil production growing to 3.1m b/d and the average crude oil export price rebounding by 16 per cent to $52.6 a barrel. The current account surplus is forecast to increase by more than 100 per cent to $12bn, equivalent to 3 per cent of GDP.