The Cabinet approved the decision to share the VAT revenues between the federal government and the UAE governments, which set the sharing quotas at 30% for the federal government and 70% for UAE governments.
The decision comes within the framework of supporting and ensuring the continuity of the provision of high quality government services in the future and helps in enhancing revenues and sources of income for the federal government and governments of the UAE.
These revenues are used to develop infrastructure and public services and move towards realizing the state's vision of reducing dependence on oil and other sources of revenue.
The related value added tax revenues amounted to approximately 27 billion dirhams, which will be distributed according to the approved percentage. The approved mechanism for the years 2018 to 2020 will continue based on the supplies that were issued to each emirate at the Federal Tax Authority.
It is worth noting that the UAE started applying VAT on 1 January 2018 with a basic rate of 5% on all purchases of goods and services in the local market, except for some exceptions in which the text specified in the law.
The Federal Tax Authority is represented by the administration, collection and implementation of federal taxes, the distribution of revenues and the application of tax procedures in force in the State.