Will looming VAT, corporate tax hurt UAE expats?

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For millions of expats working in the country, the fear of having to pay levies is very real, observes Saad Maniar…

Over the years, one of the big attractions of working in the UAE has been its tax regime: it charges no income tax on salaries. However, today, for millions of expats working in the country, the fear of having to pay taxes is very real.

Recently, speculation over the dreaded possibility of income tax has grown, after reports that the federal Government is drawing up plans to introduce a value-added tax and a corporation tax.

There is currently no personal income tax in the UAE. However, there are other tariffs, like the municipality service charges, which are levied on individuals living and working in the UAE, and the service charges of 5-10%, charged on food purchased in restaurants. Hotels charge 10-15% service charge per night on room rates.

This is the latest move by the UAE authorities, seeking to bolster state revenues.

Oil-price deregulation

The government recently moved swiftly to safeguard against oil-price shocks, by deregulating gasoline and diesel prices. Beginning August 1, the Ministry of Energy implemented a new pricing policy, linked to global oil levels. Up until last month, UAE residents enjoyed some of the lowest domestic fuel prices in the world, due to heavy government subsidies that helped to keep prices low.

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