Dubai orders freeze on government fees for three years: WAM

People travel on a boat in an artificial lake at Dubai Mall area in Dubai March 15, 2014. REUTERS/Ahmed Jadallah

DUBAI (Reuters) - Dubai has committed not to raise government fees for the next three years to promote the emirate’s competitiveness after the United Arab Emirates’ introduction of a 5 percent value-added tax (VAT) this year.

Dubai has a low-tax environment and raises the bulk of its revenue through fees such as business licensing, real estate approvals, parking and transport. It expects to raise 71 percent of state revenue from such fees in 2018.

Sheikh Hamdan bin Mohammed bin Rashid al-Maktoum, the crown prince and son of Dubai’s ruler, ordered the fee freeze, state news agency WAM reported on Sunday.

The UAE’s cabinet made a similar commitment last week not to increase fees at a federal level for three years, the statement said.

Dubai consumer inflation rose moderately in January after the introduction of the VAT, which was designed to bolster state finances in the UAE after revenue had taken a hit from low oil prices.

Saudi Arabia also introduced 5 percent VAT at the same time as the UAE, but the other four wealthy oil exporting countries of the Gulf have so far held off implementation.

Reporting by Katie Paul; Editing by David Goodman