New taxes on the horizon for the UAE (but income tax is looking unlikely)

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The government is currently “exploring other tax options”…

As the UAE braces itself for the introduction of a 5 per cent value added tax (VAT) to kick in on January 1, the government is already considering the possible implementation of other new taxes.

In an article by The National, the Ministry of Finance (MoF) is cited in a statement confirming the country was “exploring other tax options according to the best international practices”.

This isn’t completely unprecedented, however, as a few months ago we saw a new excise tax of 50 and 100 per cent levied towards soft drinks and energy drinks and tobacco respectively.

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While the MoF is remaining tight-lipped on what these potential new taxes could be (they’re quoted as saying that they are still “under analysis” and likely wouldn’t be introduced in the near future), they did take the time to stress that “the UAE is not currently looking at introducing income tax”.

This will come as a relief to the UAE’s significant expat population who look at the country’s tax-free status as one of the primary attractions for living and working here.

An income tax may, however, become inevitable. In October, Gulf Business quoted the deputy director of fiscal affairs department at the IMF, Abdelhak Senhadji, as saying that eventually a tax on people’s personal income may be necessary across the GCC depending on the development of oil markets and what the overall budget looks like. Thankfully, that still seems to be a little ways off…

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