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UAE rules out income tax introduction

The United Arab Emirates (UAE) has ruled out plans to introduce income tax, and will need more information before making any decision on taxing money sent home by foreign workers, according to Gulf News23 Dec 2015

Minister for financial affairs Obaid Humaid Al Tayer said: "There is no intention and no plans to impose taxes on the income of individuals in the UAE," Gulf News said.

Taxing individual incomes would increase wage costs and make the UAE less attractive, particularly for expatriate workers, Al Tayer said. However, the government is researching the potential effect of taxing money sent out of the country by foreign workers, he said, according to the news site.

This research is at an early stage and no decision will be made until it is complete. "Any studies will take into account the amount of these remittances and the socioeconomic impact on the UAE’s economy and foreign workers," Al Tayer said.

The UAE has been considering tax reforms as state revenues have been hit by low oil prices. The International Monetary Fund recently recommended that all Gulf Cooperation Council (GCC) countries should introduce some form of value-added tax as soon as possible. Christine Lagarde said that even at a low rate, VAT would raise considerable revenues for countries including Saudi Arabia and the United Arab Emirates.

VAT is now being discussed at GCC level, Al Tayer said. If an agreement is reached by the beginning of next year, it may be implemented in 2018 or 2019, Gulf News said.

"The tax takes at least 18 months to be implemented. We need to determine which goods and services are taxed and which are zero-rated. The private sector also needs time and the government needs to take certain measures," Al Tayer said, according to the report.

A corporate tax law is also being discussed, Al Tayer said. "We are still studying the corporate tax law, which is still in its initial stages and it’s being discussed with local governments and no agreement has been reached so far," he said.