Icon Tax Group: It Had To Happen – UAE Needs Tax Professionals To Set Up Their Tax Systems

michael-lodge

by Michael Lodge

Well it had to happen.  UAE has been a very tax friendly nation, but now they are implementing a new VAT tax system and they need tax professionals.

The United Arab Emirates is setting up a federal tax authority that will be in charge of collecting levies, as the oil-rich Gulf nation seeks to diversify its revenue base with value-added taxation.

The ministry is advertising about 30 staff positions for the tax authority on its website, including a compliance and enforcement director, auditors, analysts, accountants and administrators. Deloitte LLP is advising the Ministry of Finance on the structure and enforcement mechanism of the new government entity, according to two people familiar with the matter who spoke on condition of anonymity because the information isn’t public.

Taxation has long been a taboo in the six-member Gulf Cooperation Council, which includes the U.A.E., but a collapse in oil prices is forcing states to rethink their stance as they attempt to broaden revenue collection. The bloc is planning to impose VAT by 2018, while Kuwait is also planning to impose a 10 percent rate of corporate taxation and Saudi Arabia said in June it was mulling taxing the income of expatriates living in the kingdom.

The U.A.E. finance ministry declined to comment. Deloitte, in an e-mailed answer to questions, said its business depended on client confidentiality and it wouldn’t “discuss rumors.”

Consolidation Push
Gulf News reported in January that the U.A.E. expects to generate about 10 billion dirhams ($2.7 billion) to 12 billion dirhams from VAT in the first year of implementation. It cited finance undersecretary Younis Al Khouri as saying the duty will range between 3 percent and 5 percent.

The IMF estimates the U.A.E. it will post a budget deficit of 3.9 percent of economic output this year, wider than 2015’s 2.1 percent. It booked a surplus of 5 percent in 2014.

To ease the pressure, officials have cut fuel subsidies and halted or scaled back some major projects. The richest of U.A.E.’s seven sheikhdoms, Abu Dhabi, has embarked on a consolidation drive merging institutions from banks to universities in an attempt to cut costs.

The measures have pushed many to speculate that income tax might not be that far away. But that’s something the IMF’s chief for the Middle East thinks unlikely.

“Before we get to income taxes, there are other taxes that are probably more feasible in this current structure,’’ Masood Ahmed said in an interview in Dubai, such as levies on corporations or property.

If you need tax help you can call our office at:  877.778.1770 and visit our web site at:  www.icontaxgroup.com

Article from (Bloomberg)