VAT boom drives UAE tax revenues up 15 per cent to Dh46b

The United Arab Emirates saw its tax revenues surge by 15 percent to AED 46 billion in 2025, driven by robust Value Added Tax (VAT) and Excise Tax collections. This significant increase from AED 41 billion in 2024 underscores the accelerated maturation of the nation's fiscal system and its determined pivot away from oil dependence, providing a stronger, more stable foundation for government finances. This fiscal buoyancy comes as Minister of State for Financial Affairs, Mohamed bin Hadi Al Hussaini, lauded the effectiveness of the UAE's fiscal strategy, citing enhanced transparency, disciplined public resource management, and stricter compliance as key factors. The strong performance of consumption-based taxes is a critical indicator of the UAE's successful Economic Diversification efforts, with non-oil activities contributing a record 77.3 percent to real GDP in Q1 2025. Furthermore, the implementation of a 9 percent Corporate Tax in 2023 and the Domestic Minimum Top-up Tax (DMTT) from January 2025, aligning with OECD guidelines, signals a comprehensive overhaul of the tax framework. Looking ahead, the UAE has approved a AED 92.4 billion Federal Budget for 2026, marking a 29 percent jump in both revenue and spending, partially buoyed by new tax measures. While some forecasters like Moody's predict a 7 percent economic contraction in 2026, primarily due to hydrocarbon output adjustments, others like the World Bank and Standard Chartered project a robust 5 percent GDP growth, indicating a complex but generally positive outlook for the non-oil economy. Businesses should also prepare for new VAT amendments effective January 2026, designed to simplify procedures and mandate electronic invoicing from July 2026. The sustained growth in Non-oil Revenue is set to bolster national priorities, infrastructure projects, and public services, solidifying the UAE's position as a dynamic, diversified economic powerhouse.