Benjamin Franklin’s famous quote – that “nothing can be said to be certain, except death and taxes” – is frequently revived whenever the topic of government levies are brought up in this part of the world.
In Dubai, it is commonly believed that any move to relinquish the emirate’s tax-free status would send expatriates rushing to the airport with one-way tickets back home and the only certainty would be that it would likely trigger the death of the economy.
The debate raged to the surface again earlier this month when Damac’s Hussain Sajwani, the boss of one of the largest private-sector real estate companies in the region, addressed the possibility of Dubai giving up its coveted tax-free status.
“If there were tax, I don’t see anything wrong with it,” Sajwani said in an interview with The Sunday Times. “We live in a world where everywhere there is tax. Singapore has taxes. Hong Kong has taxes. Are they failing?
“Dubai has to spend hugely on infrastructure. So, if the government decides to impose VAT and some corporation tax, this is normal. It needs the money. We live in a world-class city, a very safe city with fantastic infrastructure, and the people who enjoy those things say, ‘We don’t want to pay for it.’ Come on, you’ve got to pay.”
Sajwani’s comments generated heated debate among Arabian Business readers: Would such a move lead to an exodus of expatriate workers and companies? Would firms decide to opt for Bahrain or Qatar when looking at the region?
Would locals also be taxed? Should citizenship be awarded to those who pay tax long-term? Would this be a sensible way to help fund the billions of dollars due to be spent on infrastructure in the coming years, especially in the run up to the World Expo in 2020?
We asked some experts for their opinions on the heated issue. While some commentators were reluctant to adopt an opinion on the matter – we’ll refrain from naming and shaming – we managed to align a panel of experts to give us their two cents on some of the pertinent issues and many offered up further food for thought.
The expert panel debating the issue consists of (in no particular order):
Neal Todd, partner and international tax specialist at law firm Berwin Leighton Paisner
Christopher Bovis, professor at Hull University Business School
Jonathon Davidson, chairman of the British Business Council in Dubai
Nicholas Cully, director - head of business development at Dubai-based wealth management firm Sovereign Corporate Services
Sanjay Modi, regional managing director at recruitment firm Monster.com
Abdul Aziz Al Yaqout, regional managing partner at law firm DLA Piper Middle East
Christopher Hennessey, professor of finance at London Business School
Chas Roy-Chowdury, head of taxation at the Association of Chartered Certified Accountants
Shrikanth S, research manager in the business and financial services practice at consultancy firm Frost & Sullivan
Bob Swarup, author and principal at advisory firm Camdor Global
Click on the next page to see why our first expert believes it would be "a bit perverse" for Dubai to go down the tax route...