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VAT


Stef.an

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VAT at 5% is a non issue. The real issue is some corrupt shopkeepers and company owners using it as an excuse to up prices 25%+ and saying oh, it’s because of VAT sir. Do they really think people are so stupid? Also the rounding up of prices due to the lack of any hard currency under 25 fils. Add up all these 10 and 15 fils here and there and multiply it by the number of customers passing through the doors and you’ll have a LOT of extra scammed dirhams in your pocket at the end of the day. 

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  • 2 weeks later...

And now they planning to increase it to 10 % 

Some GCC countries could double VAT to 10%: Report

 

The report, however, didn't say by when the GCC governments could hike the tax rate.

 

Some GCC countries could double VAT rate to 10 per cent mainly due to discrepancy between five per cent statutory and effective tax rate, says a new study released on Sunday.

"We project that the regional VAT rollout would push up government revenues on average by about 1.7-2 per cent of GDP, based on a collection-efficiency ratio of 50-60 per cent. A ratio in this range would reflect an effective tax rate of 2.5-3 per cent, lower than the 5 per cent statutory rate, owing to expected administrative inefficiencies and the ability countries have to exempt and zero-rate selected sectors," international ratings agency S&P said in a note on Sunday.

Trevor Cullinan, an analyst with S&P in Dubai, noted that the discrepancy between statutory and effective tax rates will likely influence policymakers' discussions of future VAT rate increases - potentially to 10 per cent - in some GCC countries. With a VAT increase of this magnitude, the effective tax rate would likely rise to 5-6 per cent and government revenues would likely advance by an additional 1.7 to 2 per cent of GDP on an average.

The report, however, didn't say by when the GCC governments could hike the tax rate.

Cullinan expects Bahrain will wait until later this year and Oman until 2019 to levy VAT due to administrative capacity constraints, while Kuwait's parliament is considering a progressive tax on corporate profits.

Some of the large non-GCC oil exporters have levied VAT from five to 17 per cent, corporate taxes from 20 to 35 per cent and income tax between 10 to 35 per cent to broaden their revenues. Bahrain, however, has levied corporate tax ranging from 10 to 20 per cent on foreign-owned non-hydrocarbon companies.

New taxes

According to S&P analysts, the rollout of more corporate, personal and remittance taxes GCC countries could boost the government revenues up to 4.5 per cent as the region has some room to broaden the tax base due to low tax revenues by international standards.

"We estimate that even if the GCC authorities were to significantly expand the tax base, for example by implementing a 15 per cent corporate tax, a 15 per cent personal income tax, and a 5 per cent remittance tax, this would increase government revenues only by about three to 4.5 per cent of GDP," Cullinan said in a note released on Sunday.

S&P expects implementation of new corporate tax or income tax on expats and locals will be only gradual because of the economic and social pressures that could ensue.

Some GCC countries may prefer not to roll out fresh taxes to try to gain a competitive economic advantage, it said.

According to International Monetary Fund (IMF) estimates, a 15 per cent corporate tax on all GCC non-oil companies, both domestic-and foreign-owned, could generate government revenues of three per cent of GDP on average.

In addition, a 15 per cent income tax on expatriate workers could generate government revenues of two per cent of GDP on average, depending on the size of their expatriate communities.

While a third potential tax that GCC countries are considering - an outward remittance tax - would generate revenues of only 0.3 per cent of GDP on average based on a 5 per cent tax rate.

Edited by Sidshk
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If VAT reaches 10% I could probably live with it. If it hits 15, I’d be just as well off in my own country. Salaries aren’t that good here in my line of work, especially when you have to compete for jobs with people from third world countries who will work for a quarter of what you’re willing to. Its the low VAT and zero income tax that makes it worth my while. Rent is the real killer though. For what I’m paying for a bedroom in Dubai with shared kitchen and living area, I could have a 4 bedroom house in the uk. When will something be done to address rent prices? Especially when you consider how many new towers keep popping up when there are already thousands of flats empty because of stupidly high rates. 

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On 1/29/2018 at 8:29 PM, Barry said:

If VAT reaches 10% I could probably live with it. If it hits 15, I’d be just as well off in my own country. Salaries aren’t that good here in my line of work, especially when you have to compete for jobs with people from third world countries who will work for a quarter of what you’re willing to. Its the low VAT and zero income tax that makes it worth my while. Rent is the real killer though. For what I’m paying for a bedroom in Dubai with shared kitchen and living area, I could have a 4 bedroom house in the uk. When will something be done to address rent prices? Especially when you consider how many new towers keep popping up when there are already thousands of flats empty because of stupidly high rates. 

I agree with you here. They really have huge rent fee here that it can greatly affect your budget

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  • 4 months later...

yes sure the government allotted that fund to local governments to fund their own people so all expatriates can drop their high hopes of any social security as you turn 65 we all can too f off this country...

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To be fair, if you go to any country you will always be an expatriate. You will always have less rights. The locals will always come first and rightly so. Sure, some countries offer residency but look at the shitstorm the US has become and I don't blame the UAE for wanting to go down that road. If the UAE offered PR or citizenship, it would become the United Asian Emirates overnight and the locals would be pushed out of their own lands.

If you want to have a good future for yourself, do it yourself, don't rely on any government. Put money into a pension scheme, invest your spare cash in businesses in your own country. That's what I'm doing but I'm investing in the wife's country rather than my own.

Nobody will save you if you're living abroad. You have to save yourself.

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