UAE has some of world’s least complex tax laws
The UAE has some of the least complex tax laws in the world, according to a new report released yesterday. Paying Taxes 2011, issued by PricewaterhouseCoopers (PwC), the World Bank and the International Finance Corporation, studied tax regimes around the globe and ranked the UAE sixth out of 183 global economies for its “ease of paying taxes”.
The UAE has no formal system of VAT or corporate income tax but the report incorporated various different fees, charges and forms of taxation in its findings. “There are many taxes currently levied in the UAE including corporate income tax, municipal business tax and customs duty to name a few,” said Dean Rolfe, tax partner at PwC.
“There are other items like property transfer fees and annual housing fees that are also levied in certain circumstances. That said, the tax that is levied on the case study company in Paying Taxes 2012 is social security tax levied on the remuneration paid to UAE national employees,” he added.
The report, which compared tax systems from a business perspective, says the time to complete tax obligations in the Middle East is significantly lower than the rest of the world.
The UAE dropped one place, from fifth to sixth, in this year’s table with all six GCC states among the top 15 countries in the overall ranking. The UAE was also second for the shortest time required to file tax documents, finishing only behind the Maldives. “As other jurisdictions reform their tax systems they will become easier to use and can therefore expect to improve their overall ranking. Those countries that do not reform their tax systems can expect to fall down the overall rankings over time,” Rolfe said.
"There are many factors that impact the results, but the primary reason for GCC countries doing so well is the relatively few taxes that are levied on the case study company,” he added.
According to the report, tax reforms are continuing across the world with more than 60 percent of economies making the process easier over the last seven years by introducing 244 reforms.
“GCC countries have based their business model of attracting foreign firms by setting up a tax free, or quasi tax-free environment. As a result they naturally fare very well in tax rankings,” said Philippe Dauba-Pantanacce, senior economist for global markets, Middle East and North Africa, at Standard Chartered Bank.
“The relatively recent infrastructure, low population base and willingness to move ahead in the internet economy has also helped GCC countries in the categories of payment facilities and procedure simplifications,” he added.
The UAE levies up to 55 percent tax on oil companies as well as 20 percent tax on foreign banks operating within the country. But most public revenue is generated through means other than taxation including customs duties, profit transfers and investment income.
- Understanding the ripple effect: 8 reasons the US economy has slowed down in Q1 of 2015
- Can Bahrian emerge from the oil price plunge 'stronger than ever'?
- Egyptian stocks plummet as Yemen confict deepens
- UAE sweetens flotation regulations to attract more investment
- Replacing Switzerland? Why Lebanon isn't keeping its banking secrecy a secret
- UAE, Qatar, and Saudi Arabia recognized for 'most attractive tax rates in the world'
- No where to hide: Israel, UK ally against tax evasion epidemic
- Will UAE introduce uniform corporate tax?
- PwC names Hani Ashkar as Middle East Senior Partner
- A work of art: UAE, Qatar leading the way in Gulf's art scene