UAE Potential Tax Introduction
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Is Taxation Still A Serious Consideration?
Introduction of VAT
It appears that the introduction of tax is one of the paths that has been chosen. As anticipated, it does appear to be VAT or sales tax that is favoured rather than the more controversial corporate tax. It is common knowledge that many international businesses relocate to Dubai due to its tax-free status and much of this foreign investment is reliant upon this. Introducing corporate tax would have much deeper lying significances.
It could be argued that VAT tax would be an easier starting point for taxation in the UAE. The number of visitors coming to Dubai is increasing every year, with Dubai International Airport now being the busiest airport in the world. Dubai is recognised as the number one tourist hub and it is unlikely for this to change with the introduction of low level taxation. The level of taxation will still be lower than in most other countries worldwide. People will still come here and spend their money, whether as tourists or expatriates.
The Expo 2020 is expected to bring further volumes of people and indeed investment so perhaps this tax will help to fund the economy ahead of 2020 and devolve from the previous reliance on oil. 7days newspaper has reported that “the move is forecast to generate between Dhs10 billion and Dhs12 billion in revenue for the UAE alone and is seen as one potential source of post-oil revenue for governments.” (http://7days.ae/uae-ministers-plan-meeting-discuss-vat/79373
The effect this will have on the everyday people living in Dubai, on tourism, the property market or whatever area is relevant to you ultimately remains to be seen. One thing that is evident is that some sort of taxation is going to happen in the not too distant future. Watch this space…
[Nb – The author of the above article is an LLB Bachelor of Laws graduate from the UK and is the Managing Partner of Your POA – Dubai . Your POA specialise in representing national and international clients as Power of Attorney in Dubai for a wide range of property related matters; from Property Handovers & Title Deed Registrations to Sale, Purchases & Gift Transfers. If you need a Power of Attorney or have questions on any property related matters in Dubai, please email [email protected] or call Philip on +971 52 832 7420]