The number of UAE businesses registering for taxation in 2019 is set to grow from levels previously seen in 2018 as more companies become tax compliant, the head of the Federal Tax Authority said.

The limited number of businesses and people that registered for taxation last year was due to a lack in compliance, Khalid Al Bustani said at the sidelines of the Arab Regional Tax Forum in Dubai on Sunday. However, he said the authority had conducted numerous awareness campaigns to limit the number of those penalised for non-compliance.

The rise in the number of new businesses launched in the UAE will also result in an increase in the number of registrations this year, he added.

“Regarding registration, this is a dynamic process because we have companies that are still reaching the compulsory threshold, when they reach that they need to register,” Mr Al Bustani said.

The Emirates introduced a 5 per cent VAT in January last year, and in 2017, it rolled out an excise tax on fizzy and energy drinks and tobacco, to diversify income and create new revenue streams as part of a plan to lower dependence on oil revenues. The International Monetary Fund estimates the introduction of VAT in the Arabian Gulf region could generate between 1.5 to 3 per cent of non-oil GDP in new revenue.