The Gulf Cooperation Council (GCC) states offer a more conducive environment to pay taxes as compared to most of the countries around the world where the taxation regime exists for a long time.
According to the latest Paying Taxes, 2020 report released by World Bank and PriceWaterhouseCoopers on Tuesday, paying taxes in Bahrain is easiest globally followed by Hong Kong, Qatar, Ireland, Mauritius, Kuwait, Singapore, Denmark, New Zealand and Finland making up the top 10 ranking. While Oman is ranked 11th, the UAE stands at 30th and Saudi Arabia at 57th.
The GCC region is relatively new to the tax regime as governments have recently introduced value-added tax (VAT) and excise taxes on unhealthy items such as tobacco, sugar and carbonated drinks. Moreover, taxes in the GCC are also among the least globally.
Data showed that it is still easier to pay taxes in the UAE than advanced countries with a long experience in taxation regimes such as Norway, Spain, China, Austria, Germany, Japan, France, Russia, Malaysia, and other nations.
Mark Schofield, partner, and Tax and Legal Services Leader at PwC Middle East, said there have been changes in the ranking for the UAE due to the introduction of VAT in January 2018 and related compliance requirements introduced for businesses registered for VAT.
"According to the Paying Taxes case study, it takes 72 hours to comply with VAT in Saudi Arabia and 104 hours in the UAE. This is in line with the global average of 90 hours and somewhat higher than the European Union average of 52 hours. Given that most European countries have long-established VAT systems, it is not surprising that newly-introduced systems may take longer to comply within the GCC," he said.
"The difference in the time to comply between Saudi Arabia and the UAE could be a result of several factors. For example, the VAT regime in the UAE has some specific complexities as more supplies are zero-rated, there are more exemptions, and special schemes such as designated zones have been introduced.
"Furthermore, the UAE has requested the reporting of output VAT by emirates. The process of registering as a taxpayer is not included within the time to comply, which looks only at the time to prepare, file and pay taxes, but it can present a considerable burden for businesses. Saudi Arabia automatically registered businesses based on existing registration for income (or Zakat) taxes, whereas in the UAE businesses had to submit registrations themselves," he added.
Regionally, Middle East continues to have the lowest time to comply in paying taxes at 155 hours despite an increase in average time to comply with the region increased by 11 hours. Middle East is followed by European Union at 161 hours; 182 hours in North America; 191 hours in Asia-Pacific; 199 hours in Central America and the Caribbean; 219 hours in Central Asia and Eastern Europe; 285 hours in Africa; and 519 hours in South America.
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