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Thu 24 Dec 2015 01:03 PM

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UAE, Qatar named world's least demanding tax regimes

World Bank, PwC announce latest tax rankings as GCC gov'ts debate introduction of VAT

UAE, Qatar named world's least demanding tax regimes

The UAE and Qatar have topped a global list for the ease of tax payment, as plans to introduce value added tax (VAT) gain traction in the Gulf region.

According to the latest Paying Taxes report by The World Bank and PwC, the UAE and Qatar have the least demanding tax framework in the world.

It said both countries have a total tax rate of 15.9 percent, four average number of payments and an average time to comply of 12 hours.

Globally, Saudi Arabia ranked third, Bahrain (eighth), Oman (10th) and Kuwait (11th).

The report analysed the same factors in 189 countries, with global averages of 40.8 percent total tax rate, 25.6 average number of payments, and average time to comply of 261 hours.

Despite a small increase in the total tax rate since last year, the Middle East as a whole is the easiest region in which to pay tax, the report said, adding that it has the lowest total tax rate and time to comply, and all of the sub-indicators have been stable since 2004.

"The latest findings from the study reveal that while the region remains the easiest to pay taxes in, the implementation of the VAT will bring a portfolio of new discussions to tax reform," said Dean Kern, partner, PwC's Middle East Tax and Legal Services Leader.

Recent discussions on the implementation of the VAT in the GCC will transform the tax system in the UAE, he said, adding that the intention is to have a common framework agreed at the GCC level, based on which GCC states will introduce their national VAT systems.

Jeanine Daou, partner and Middle East leader for Indirect Taxes and Fiscal Policy said: "The paying taxes report helps inform the discussion around tax reform, a topic that is currently extremely relevant in the GCC.

"The UAE and GCC governments will need to make strategic decisions concerning key elements in the system, including harmonisation of a number of areas across the GCC to make the VAT system fully efficient and compatible with the requirements of a common market.

"In addition, a certain level of harmonisation of rules and simplification across the GCC will help reduce VAT compliance costs for GCC businesses which would contribute significantly to increasing the competitiveness of GCC companies."

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