(MENAFN- Khaleej Times)The UAE is moving towards a tax regime as a draft law on corporate tax is being discussed by the local governments and the ministry of justice a top official said.
Younis Haji Al Khoori the undersecretary of Ministry of Finance said that a draft of law on corporate tax is under discussion with the federating units and the ministry of justice. Also he said discussions are going on with the GCC member nations on the possible introduction of the Value Added Tax or VAT. Speaking to reporters after signing an agreement with the World Bank for the opening of its office in Abu Dhabi which would be the third in the region after Kuwait and Riyadh the undersecretary said the International Monetary Fund has been recommending the introduction of taxes. In the UAE foreign banking companies pay 20 per cent corporate income tax on their earnings. In a comment Zeine Zeidane advisor of the Middle East and Central Asia department and the mission chief for UAE at International Monetary Fund on August 4 advised the UAE to move forward with the CIT. "So incorporating some tax applicable to all companies not only foreigners but foreign and domestic companies with a very low and flat tax" says the transcript of a press talk on the website of the fund. "They (UAE) could do that in a very progressive way with a very low rate at the beginning because the issue is not about the income. They have a lot of income coming from oil but it's also a way to start diversifying revenue to put in place a tax administration and to increase transparency in the economy overall" Zaidane said in a comment after the conclusion of consultations under article IV. Last month the undersecretary was quoted by media saying that the authorities were still evaluating the social and economic impact of the laws. Hafez Ghanem vice-president Mena at World Bank said that the UAE is likely to have a budget deficit of 3.6 per cent this year due to falling oil prices. However in 2016 the oil rich nation would have a small budget surplus of 2-3 per cent. The World Bank welcomes the withdrawal of subsidies on energy which is an "excellent move" he said. "It's exactly the right policy since oil prices are low. This is what needs to be done and I hope government would continue in that direction. What we have been telling all governments in the region is that modern way of achieving social protection is not through subsidiesed prices; it's through cash transfers to those who need it." On the public debt law Younis Haji Khoori told reporters that work on the legislation began in 2008 with the assistance of the World Bank which reviewed its need in the context to building the yield curves. The MOF has drafted the law which is still in its legislative stages and has not been finalized as yet the undersecretary said. -
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