GCC mulls income tax levy by 2012
The six Gulf countries have given in-principle approval to implement corporate and individual income tax by 2012, and are now mulling to bring the deadline closer.business Updated: Dec 30, 2008 16:39 IST
The six Gulf countries have given in-principle approval to implement corporate and individual income tax by 2012, and are now mulling to bring the deadline closer, a newspaper report in Dubai said.
Individual members of the Gulf Cooperation Council (GCC) are, however, unlikely to impose income tax unilaterally.
"The prospect of drastic reductions in oil revenues and the resultant fiscal deficit has forced the six countries to examine whether implementation can be done earlier than 2012," an expert close to the matter told the Emirates Business.
GCC member countries have been grappling with the prospect of a significant contraction in energy income from oil and gas exports next year and the spectre of budgetary deficits.
"There is a need to make the GCC monetary system more comprehensive and forward-looking. A modern tax system is one of the methods of breaking the traditional way of handling the fiscal system. It could be the first step towards monetary globalisation," an analyst said.
Foreign banks are taxed at the rate of 20 per cent on their taxable income in Abu Dhabi, Dubai and Sharjah. Oil companies pay a flat rate of 55 per cent on their taxable income in Dubai and 50 per cent in the other emirates.