IMF: Corporate Tax to Improve Non-Oil Tax Revenue Collection

Updated on Sunday 19th February 2017

IMF: Corporate Tax to Improve Non-Oil Tax Revenue Collection Image
Improving the tax revenue collection in the Gulf Cooperation Council countries (GCC) has been in a debate by the International Monetary Fund (IMF) which considers a corporate tax rate of 15% might help in this matter. The states from the GCC are the ones that will give the final answer in this matter, after a comprehensive analysis of the business market in the Arabian Gulf. Before we explain the consequences of such tax that might be accepted, we remind that our accountants in Dubai are ready to provide you with suitable information about the taxation system in the UAE and about the financial services you can obtain for your company.

Why a corporate tax on non-oil revenue collection is needed?

A contribution generated by the collection of a non-oil tax revenue with a corporate tax of 15% rate in the GCC seems to be a correct and sustainable measure, according to the declarations of the IMF. Such important tax can be implemented in future years if the countries from the Arabian Gulf will agree in this matter. Numerous overseas businesses that have activities in Saudi Arabia and the UAE might be subject to a corporate tax rate of 20% in the next years. This corporate tax will be implemented as soon as the VAT will be adopted in the GCC starting with January 2018, as part of a significant fiscal modification which relates to the falling oil revenues registered in the last years.

Why FMI impulses such measure in the GCC?

The corporate tax and the VAT will guarantee effective and ongoing tax methods in the GCC states which will trigger the majority of non-oil tax incomes for numerous countries’ resources. According to the IMF statements, the 10% or the 15% corporate tax rate can be a proper percentage which can be implemented for the businesses in the Arabian Gulf. A low rate may not raise the incomes expected by the IMF that considers higher rate appropriate. But the tax percentage might vary for each country in the Arabian Gulf, considering first of all the GDP (gross domestic product) per year. The implications of such corporate tax to improve non-oil tax revenue collection need to be attentively measured, considering that there are many tax exemptions in the GCC.

It is good to know that you can receive audit services in Dubai, no matter the type of company you might have, therefore, you are invited to contact our accounting firms in Dubai.

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