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UAE rules out income, corporate tax plans

DUBAI — The UAE has no plans to impose income tax or new service fees on individuals and companies to fund any fiscal deficit, Minister of Finance and Deputy Ruler of Dubai Shaikh Hamdan bin Rashid Al Maktoum said.

The Ministry of Finance has not included any tax plans in the 2012 budget and does not intend to introduce taxes in the coming years, Shaikh Hamdan was quoted on Wednesday as saying in an interview with Arabic daily Al Bayan. However, he said the ministry is conducting studies on socio-economic effects of a proposal to levy taxes on companies operating in the UAE.

The International Monetary Fund recently said in a report that the UAE is conducting an economic impact study of a possible introduction of a uniform corporate income tax as the country seeks to reduce its dependence on oil revenue.

Shaikh Hamdan said the UAE has been consulting GCC partners on a proposal to introduce VAT (value added tax) but the plan is still at the discussion stage.

The UAE does not need to impose taxes to finance its fiscal shortfall, which is below one per cent of 2012 budgeted expenditure of Dh41.8 billion against the revenue of Dh41.4 billion, he pointed out.

“Most countries have budget deficits but by the end of the fiscal year, we find that there is no actual deficit. We still have enough financial resources to finance the budgeted spending,” Shaikh Hamdan said.

On the outcome of the United Nations Happiness Survey, which ranked the UAE first among Arab countries and 17^th worldwide, Shaikh Hamdan said although the achievement is important and that the country deserves to be among the top three in the world. On the basis of the UAE’s superb infrastructure and world-class service facilities provided to Emiratis and expatriates, and given the nation’s secure and stable socio-political environment, the Emirates should have been ranked among the top three in the world, he said.

Shaikh Hamdan called for a supply control in the real estate sector until a supply-demand balance is achieved.

issacjohn@khaleejtimes.com