Dubai Needs to Extend Taxation
August 6, 2015 Taxation in UAE
WASHINGTON D.C. – The UAE should implement a VAT, excise tax on vehicles and corporate taxes in order to reduce its reliance on oil.
In a new statement issued on August 4th the International Monetary Fund called on the United Arab Emirates to implement new tax measures in order to create extra buffers against the volatility of oil prices.
The main tax issues recommended were a 5 percent Value Added Tax and a 15 percent excise duties on passenger vehicles.
It was also suggested the UAE should implement taxes on businesses, especially corporate income tax, as currently only foreign banks are obligated to pay an income tax, while other business face only a small number of municipal taxes.
According to the IMF, the UAE already has some protection from fluctuations in oil prices due to previous efforts to diversify its income sources, but further taxes which do not rely on oil would serve to improve the UAE’s position even further.
It was also noted that as the government already collects high revenues from oil, it now has a perfect base upon which to build a low-rate wide-base tax policy.
Photo By: Joi Ito