By investigating additional levies, the United Arab Emirates and its neighboring Gulf Cooperation Council (GCC) nations might boost their incomes and further diversify their economies, according to the International Monetary Fund (IMF).
As the economy diversifies, investigating options like property taxes, luxury taxes, or environmental levies would further support revenue mobilization,” the Fund stated in its most recent report on the Gulf area.
The dramatic drop in oil prices over the past ten years spurred a wave of consumption tax revisions in the UAE and GCC. Bahrain, Oman, Saudi Arabia, and the United Arab Emirates are the four GCC nations that currently impose value-added tax (VAT), and all but Kuwait have embraced excises.
Similarly, Oman has declared its intention to impose an income tax, making it the first country in the region to do so. However, some nations have also declared that multinational corporations will be subject to a minimum local top-up tax of 15%.
Tax implementation is a difficult process that has taken decades in developed economies. Governments are still updating legislation and regulations around new taxes to ensure compliance and the installation of modern tax collection systems because oil-producing Gulf countries are relatively new to imposing taxes in comparison to the OECD and other larger economies.
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