Can VAT Cuts Help The Post-Pandemic Economy?

SourceAl Bawaba

BUSINESSES and enterprises the world over have been hard hit by the Covid-19 pandemic. Since the outbreak, the United Arab Emirates has taken a series of measures to help alleviate the fallout on the economy. For businesses in the country, the hefty stimulus packages announced in 2020 amounted to hundreds of billions of dirhams, did away with many government service charges and offered discounts on utility and running expenses.

This is the right approach indeed.

Any manner of extra charges should be done away with during times of crisis, as businesses and entrepreneurs – that are the lifeblood of any economy – must not be drowned in the burden of taxes and VAT as they are already enduring the worst of the downswing. Those facing losses in the current climate should be able to deduct the losses against profits when the situation improves and not be dragged down by taxes.

However, for many local firms and homegrown enterprises, the effects more...