Expat exodus if UAE rolls out taxes

HEADING HOME: Over 65% of respondents said they could leave the UAE because the introduction of VAT would lead to further taxes.

The UAE could face a mass exodus of expatriates if the government follows up the introduction of value added tax (VAT) next year with further taxes on the population, the latest ArabianBusiness.com spot poll has revealed.

Over 65% of respondents said they were considering leaving the UAE since the introduction of VAT would inevitably lead to other taxes such as income tax.

"Tax is on the way, and that's not part of the bargain I made when I came here,” they stated.

The UAE is currently a very attractive destination for expatriates from around the world due to the tax free salaries on offer.

Nearly 20% of respondents said they were not concerned about the consequences of the government introducing VAT, stating that as long as it was an improvement on the current customs duties it "should be relatively painless".

Close to 17% or respondents said VAT was inevitable and needed, and could help in lowering record inflation in the Gulf state.

UAE inflation hit 9.3% in 2006 and probably accelerated to 11.4% last year, according to a recent poll of analysts.

RELATED: Gulf inflation to surge past 9% this year

Dubai Customs Executive Director Abdul Rahman Al-Saleh said on Thursday the UAE was expected to introduce VAT sometime next year, without being specific.

RELATED: Entire GCC to impose VAT within 5 years

All GCC countries will have value added tax (VAT) within five years, he added.

The tax, which will replace customs duties to be phased out under free trade agreements, is likely to be set at a flat rate of between 3% and 5% and would be applied to all goods and services.

Small businesses with revenues under $1 million will be exempt from the tax, according to a statement by Dubai Customs last week, and companies within the health and education sectors could also be exempt, Al-Saleh said.

News of the introduction of VAT has raised fears that the UAE will become a less attractive place to work and do business, but Al-Saleh denied this, stating that VAT was replacing customs duties and was being introduced at a very low rate.

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USER COMMENTS (8 COMMENTS)

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Oh yes it does!
Posted by AXL, Sharjah, UAE on 16 May 2008 at 22:31 UAE time


Dear Sonia, such a pleasure to read your comment. And yes, it definitely sucks! God bless you.

Neva'mind Dubai
Posted by Sonia, Dubai, UAE on 15 May 2008 at 15:36 UAE time

So sad! Gone are the days when people could actually enjoy staying in this city! After roaming various European countries and United States, I'd always revert back to Dubai..reason - very cosmopolitan, No taxes, Simplistic, enjoyable living! As if the scorching heat weren't, here come the road taxes, HOW BIG IS DUBAI ANYWAYS? Yeah maybe 1/10th of New York, who am i kidding? Bet it's even smaller! You actually made a mark on the world with the Palm (BRAVO!) but quiet sadly you were barely visible before that! .. Do you realise you got to hike up salaries of workers to make them pay THOSE SO CALLED NEW TAXES? Show some appreciation for all those who have/ had been slogging for years on end your underdeveloped mice holes offices at your untimely working hours and obviously without international holidays. I hate to say this but I loved this place 'ONCE upon a time...and now, it merely sucks!

VAT for Dubai
Posted by Charles David on 14 May 2008 at 09:26 UAE time


There are about 10-15% of the expat population who earn a salary where they have no issues with new fees, service charges, etc...that the government regularly assess. The rest of us live according to our income, some comfortably, modestly, or using your credit cards to get by on a monthly basis.
The introduction of a Value Added Tax will be the "preverbial straw" that will break some expats backs. They will be forced to leave. Others will contemplate, while the businesses will add this 5% to their costs and feel very little of the pain.
Complain all you like, for there is nothing that will happen, unless, the collective actions of the expat community truly hurt the future ambitions of the emirate of Dubai and its very wealthy supporters.
There are only two alternatives...stay, complain, be miserable, or, let your feet do your talking and go back to your home country. Period.
Only the latter, in mass numbers, will make a difference.

A Population Explosion - Not an Exodus!
Posted by Louie Tedesco, Dubai on 14 May 2008 at 08:20 UAE time


Ongoing comments by many readers after (many) articles announcing an "exodus" of residents when ___(fill in blank)___ happens are pointless. After living here for six years, I have not once witnessed the views, suggestions or bright ideas of any readership group being implemented. It is akin to living in a vacuum or being stuck in the movie "Groundhog Day" where you know what needs to be done, but cannot change anything. Well-meaning journalists write critically acclaimed articles, editors air relevant views on society and life in general, the readership applauds and voices ideas for improvement BUT nothing changes and the empowered leadership continues to march down the trail towards an imploding economy.

An exodus would be a massive loss of large groups of residents. Are you leaving? Or are you touting to your friends and family the merits of your hard-working job yet living a flamboyant lifestyle, often over your means financed on credit to make ends meet? If you're leaving, there are ten job suckers, er- seekers, waiting in queue to take your place, for less salary. Once they arrive and "wake up" to the reality here, they too may leave but new blood is always salivating in the wings waiting to move here - and so the cycle begins anew. Internet forums and chat rooms haven't changed peoples gullibility - financial scam emails from Nigeria still succeed to this day.

Earning are to be spent here, not saved or sent home. Remittances sent outside the UAE to not add value to the Dirham so policies are geared to ensuring earnings are largely spent here. Granting large salary increments and subsidies to a small group of locals rather than allowing large numbers of expats to send home money now benefits the nations financial bottom line, not your bottom line as before. Money will be taken out of your pocket one way or another in the form of fees, duty, Salik, service charges, processing, handling, etcetera. You name it and there's already a charge you're paying even if it's not blatantly called "tax".

VAT
Posted by Regular Dubai Visitor, London, United Kingdom on 13 May 2008 at 14:14 UAE time


As somebody who has dealt with VAT returns in the UK ever since their introduction, I cannot see how all the small shopkeepers and one man businesses in the U.A.E. will possibly cope with VAT when they have never even needed to keep proper business accounts up until now.

Will they be exempted or simply driven out of business?

VAT????
Posted by Ralph, Dubai, UAE on 13 May 2008 at 10:04 UAE time


Are we not paying enough already? UAE is not such an attractive destination anymore, most people see right through it once they get here, with the current rent rates going up everyday and cost of living on the increase every day, with Slaik on the road whats next intriduce salik over the bathroom door maybe?? people have had enough of these additions all the time, all we seem to be doing here is pay pay pay pay,and the funny thing is they introduce taxes and additional cost on people by saying "it for the residents benifit" hahaha funnyyyyy well im out of here soon as i have had enough and alot are doing the same thing.

SHOW ALL COMMENTS

Inflation and taxes in uae
Posted by Homa Farley, Abu Dhabi, U.A.E. on 13 May 2008 at 09:47 UAE time


I can not understand why the government does not help to ease the living situation for the expatriates in the country. Most of us have spent many years putting so much positive energy in building this country and now we are finding it hard to even buy food and other essentials. What is the point of making life harder for us while life is being made easier for the locals Though they have the right to live well, what is wrong witeh supporting the expats who have put so much in to this country. How about giving us a break and increasing our standards of living instead of taking back every Dirham we make. Please remember that this country would not be what it is if it was not for the long life efforts of the expatriates. We seem to get no special treatment for all of our hard work. Even at the airport we have to queue along with the tourists. We do not even have a dedicated line for residents at the airport. The government should consider paying back the hard working expats who have contributed so much to make this country what it is now.

Expat exodus if UAE rolls out taxes
Posted by Nirmesh Tiwari, Dubai, UAE on 13 May 2008 at 08:53 UAE time


The statment looks very realistic, as already in UAE there are hundred's of FEES, which are contributing indirectly to the Govt as Indirect Taxes, and after that also if we have to pay direct taxes, I would prefer to settle back home & pay Taxes to my Country so that there will be contribution to my Economy & Infrastructure.

Any ways the sky rocketing rent & cost of living is going up in such a speed that for a common individual its very tough decision to stay in UAE & think of a better future.

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