twisty100

Are you suggesting that the UAE will only add rental tax? Or also corporation and income tax as well?


If they add corporation and income tax i would close my operation here in Dubai and move elsewhere. This is why i believe this will not happen in the next 10-15 years. The country is still in the growth phase, the growth is fuelled by the lack of taxes, if you add taxes the growth stops.

Dutchie

Hi Twisty,

I'm not trying to create a doom scenario here on BE. But the UAE government has not for nothing been looking at the various taxing systems used in Europe, Canada and the United States. What is rumored here in Europe is that they (perhaps gradually) want to introduce the so called flat tax rate on everything. Like various European countries do, and is the easiest on government level to collect. It's their own often uncontrolled grow that the UAE can't afford to maintain anymore, just look at their annual budgets every year and then compare those figures to what the experts have to say. When I read the interviews here in Holland with financial specialists and investors agencies there are serious warnings being aired about the side effects of the tax introduction on the UAE economy and on long term investments. It's nothing new to the ME, I mean the attempted introduction of tax. Look what happened in Saudi Arabia in the early 1980's. The introduction of expat taxes brought the complete Saudi economy to an almost stand still. The Saudi's reluctantly abandoned the tax system about three months later due to massive local and international protests. It triggered the biggest departure wave of expats in Saudi, me being one of them.

Dutchie

And it's not for nothing that countries like Malaysia are hitting the top three investors spots in Holland. If read the info that is sent to me on the Senai Airport and tax free haven being built around it? Yes, I think that within now and five years time Dubai is going to have a major investment problem by international companies. And the UAE is wise enough to see that coming.

Dutchie

Shoppers in the Emirates could soon be paying sales tax in moves proposed by the International Monetary Fund (IMF) to broaden the tax base with a value added tax (VAT) system.

The IMF’s annual report on the UAE’s economy, released last week, revealed that the government had agreed it needed to broaden its tax base.

It said talks on the introduction of a national sales tax had “gained momentum at the cabinet level”, and that the UAE had asked the global monetary organisation for technical help. “A VAT system will allow the federal government to reduce its dependence on charges and fees,” the report said.

The IMF, which has long encouraged the UAE to raise taxes and reduce its dependence on oil and gas revenues, also recommended that the Emirates extend corporate income tax to sectors outside the hydrocarbon industry. “The Emirates should considering introducing a property tax,” it added.

Although the UAE’s Ministry of Finance declined to comment on which items might be subject to VAT, or at what rate, analysts said the move could be easily absorbed.

“A 9% to 18% value added tax on retail and wholesale trade would hardly be a burden on consumers, considering the UAE’s per capita GDP of US$20,000 in 2004,” said Hany Gemena, an economist at EFG-Hermes.

“Egypt, which has a per capita income of about US$1000, has an average value added tax of 10% but this does not curb economic activity,” he added.

Others said that the reforms could still be some time off. “Most countries take a couple of years to introduce VAT,” said Dennis Knowles, indirect tax partner at Deloitte. “Once you’ve announced it you need to educate people and firms will need to make changes to their businesses, introducing computerised accounting, for example.”

The move would nevertheless signal a considerable policy shift for the UAE, which has attracted significant foreign investment through its low-tax regime.

At present, there is no national sales or income tax in the country, although profits of international banks and energy firms are taxed at federal level. Some of the Emirates also levy limited sales taxes. Dubai, for example, has a 10% charge on hotel bills.

Although concerns have been raised that the introduction of VAT would impact on lower-income sections of the population, observers said it could also have social benefits. One could be greater spending on public services and infrastructure.

“The IMF may well be saying something like ‘you need a way of increasing everyone’s lot’,” said Deloitte's Knowles.

“VAT is generally one of the cheapest forms of tax to introduce. Businesses administrate it all, so you reduce the control problem. It is very cost effective,” he added.

twisty100

I am aware of the VAT and this is understandable, however, are they proposing to introduce income and/or corporation tax?

Dutchie

I think this answers your question.

Quote "The IMF, which has long encouraged the UAE to raise taxes and reduce its dependence on oil and gas revenues, also recommended that the Emirates extend corporate income tax to sectors outside the hydrocarbon industry. “The Emirates should considering introducing a property tax,” it added.

arbroath_abroad

yea, us guys who build and commission automated IT based Drilling platforms must be increative and lack Knowledge...in fact, i prob know more about IT than half the fuds swanning around Media and Internet city with MCSE's up the ying-yang.


I guarentee that our company will be here with full expat 'feather bed' status well beyond 2012

I wish i had your intellect, then i could too struggle and no doubt pay a large portion of my i'd guess below average salary to a fat cat arab landlord.

no siree, im way to smart for that..

but come back with an interesting debate and belittle me

arbroath_abroad

it wont happen in my industry in the next 10-15 years im afraid. The demand is there for what we do, we have backlogs on our orders for the next few years etc etc

make hay whilst the sun shines..

Bonny Boy

Agreed.

It will not happen in oil and gas because in general they operate in 'difficult' locations - Nigeria, Kazakhstan, Sakhlin Island etc - where a full package is definitely required. This industry norm spills over into the less difficult locations such as AD. (My previous package included two toilet rolls and two bars of soap per week )

To a lesser extent this is also true of construction.

The 'newer' expat industries are in the more developed locations where such 'feather bedding' is not required unless you are someone they really need.

Bonny Boy

By the way - Sorry your thread has been hijacked Louniliki.

So long as your package is anywhere near satisfactory (toilet rolls or not) you should have a great time in Dubai. Don't overlook Bahrain either.

It is generally families who need to watch the budget very carefully.

Eeyore

Media is considered one of the creative industries, oil isn't. That's just the way it is. If you want to argue the toss about why oil isn't usually considered one the knowledge-based industries either, speak to Drucker (although that'll be difficult, because he's dead).

You couldn't do what we do. We couldn't do you what you do. We're each specialists in our own fields.

Given that an average salary in Dubai is about 4000dhs per month, I somehow doubt we'd have such a good lifestyle here if we were only earning below-average

I've said many times that we're doing well here financially, despite not having paid housing and all that stuff. I have to be honest and say we actually have a pretty easy life here; the handful of people we know personally who do get the full package have to work bloody hard for it, whereas I don't. I'm pretty much left to do what I enjoy, being creative with video and motion graphics, and I get paid well for it - I know full well I'm onto a good thing there

But just because we're doing well doesn't mean I can ignore all the many problems that exist here. Y'know, social conscience, political awareness, bullshit detection, all that boring pinko wet liberal stuff - I can't switch that off.

Dutchie

Hi everyone,

Once again, no insult intended for anyone on this board okay? I wish every one on this planet a five star life style. It's my line of work that makes me think ten steps ahead of what's going on in todays world, and the possible consequences of the changes involved. If taxes are or are not to be introduced into the UAE? Is up to you to decide. But if major financial heavy weights in the EU and USA get involved, I think you can honestly state that the smoke is turning into fire. The affect on the average expat person living and working in the UAE basically loosing 9 to 18% of his or her income can not be underestimated. That's all I was trying to say and explain. Even if the tax (VAT/Income tax) introduction is done in phases, as the UAE minister of finance is now admitting.

Dutchie