The possible introduction of new taxes may threaten the high ranking of the UAE and neighbouring Gulf countries for the cost and ease of paying tariffs, a Dubai tax expert says.
The Emirates' tax regime came fourth in the Paying Taxes 2010 study, behind Qatar in second but ahead of Saudi Arabia (seventh), Oman (eighth), Kuwait (11th) and Bahrain (13th).
The Maldives fared best in the study, while other Middle East countries ranked towards the bottom of the list of 183 countries.
"This is effectively a tax-free environment but there is no guarantee that this status quo will remain for the next 10 to 20 years, as oil revenues run out and governments will need new sources of income," said Dean Rolfe, a tax partner at PricewaterhouseCoopers (PWC) in Dubai.
The study is based on hypothetical companies that are owned by locals and employ only locals. It focused solely on corporate taxes and was conducted by PWC, the World Bank and the International Finance Corp, an IMF arm.
The GCC has been looking at the effects of value-added taxes (VAT) for the region. Its secretariat gave a pilot project to the UAE to study the impact, which led to a joint study by Dubai Customs and the IMF.
Dubai Customs said in June last year the UAE Government would announce the introduction of a VAT at a rate between 3 per cent and 5 per cent within a few months. But nothing has happened so far.
"These results help explain why places like Dubai have become such popular locations for international organisations doing business in the Middle East," Mr Rolfe said.
"That said, while current tax rates are generally low, there is the risk that new taxes will be introduced in the future which could impact rankings.
"Taxes are on government agendas - many [regional] governments have reformed and are thinking of reforming their taxes. The IMF has been encouraging local governments to look at alternative sources of income - given the extreme volatility of their main revenue source", which is oil and gas.
Asked whether the debt crisis would make the UAE or Dubai more prone to impose taxes, Mr Rolfe said: "I don't think governments will make such a decision based on economic cycles."
The introduction of a VAT would partially replace the 5 per cent customs duty that is scrapped when countries enter free-trade agreements, such as those Oman and Bahrain have signed with the US.
There are no personal taxes in the region. Oman, Qatar, Kuwait and Saudi Arabia impose corporate income taxes of about 20 per cent.
In the UAE, foreign banks pay a similar income tax, but that does not apply to banks doing offshore business in the Dubai International Financial Centre. The country also levies a 12.5 per cent tax on employing locals.
Bahrain is the other Gulf country not to levy corporate income taxes.
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Profile of MoneyFellows
Founder: Ahmed Wadi
Launched: 2016
Employees: 76
Financing stage: Series A ($4 million)
Investors: Partech, Sawari Ventures, 500 Startups, Dubai Angel Investors, Phoenician Fund
A timeline of the Historical Dictionary of the Arabic Language
- 2018: Formal work begins
- November 2021: First 17 volumes launched
- November 2022: Additional 19 volumes released
- October 2023: Another 31 volumes released
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Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
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The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
Business Insights
- Canada and Mexico are significant energy suppliers to the US, providing the majority of oil and natural gas imports
- The introduction of tariffs could hinder the US's clean energy initiatives by raising input costs for materials like nickel
- US domestic suppliers might benefit from higher prices, but overall oil consumption is expected to decrease due to elevated costs
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
COMPANY%20PROFILE
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THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
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Greatest of All Time
Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
THE SPECS
Engine: six-litre W12 twin-turbo
Transmission: eight-speed dual clutch auto
Power: 626bhp
Torque: 900Nm
Price: Dh940,160 (plus VAT)
On sale: Q1 2020
Result:
1. Cecilie Hatteland (NOR) atop Alex - 31.46 seconds
2. Anna Gorbacheva (RUS) atop Curt 13 - 31.82 seconds
3. Georgia Tame (GBR) atop Cash Up - 32.81 seconds
4. Sheikha Latifa bint Ahmed Al Maktoum (UAE) atop Peanuts de Beaufour - 35.85 seconds
5. Miriam Schneider (GER) atop Benur du Romet - 37.53 seconds
6. Annika Sande (NOR) atop For Cash 2 - 31.42 seconds (4 penalties)
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Company%20Profile
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The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded