The UAE retained its first position in the global ranking for ease of tax payment according to a report released on Monday by the World Bank and PricewaterhouseCoopers.

"With the least-demanding tax framework well below the world average the UAE has a total tax rate of 15.9 per cent four average number of payments and an average time to comply of 12 hours" said the World Bank's "Paying Taxes report".

With the UAE Qatar shares the top spot with a total tax rate of 11.3 per cent four average number of payments and an average time to comply of 41 hours. That compares with global averages of 40.8 per cent total tax rate 25.6 average number of payments and average time to comply of 261.

The report analysed the same factors in 189 countries with global averages of 40.8 per cent total tax rate 25.6 average number of payments and average time to comply of 261. Currently Saudi Arabia ranks third on the list followed by Bahrain at eighth Oman at 10th Kuwait at 11thand Lebanon at 45th.

Despite a small increase in the total tax rate since the previous year the Middle East region as a whole is the easiest region in which to pay tax. It has the lowest total tax rate and time to comply and all of the sub-indicators have been stable since 2004.

"The annual report is a powerful index in shaping discussion on tax reform and fiscal policies for many governments. The latest findings from the study reveal that while the region remains the easiest to pay taxes in the implementation of the VAT will bring a portfolio of new discussions to tax reform" said Dean Kern partner at PwC's Middle East tax and legal services leader.

Recent discussions on the implementation of the VAT in the GCC will transform the tax system in the UAE. The intention is to have a common framework agreed at the GCC level based on which GCC states will introduce their national VAT systems.

"The Paying Taxes report helps inform the discussion around tax reform a topic that is currently extremely relevant in the GCC. The UAE and GCC governments will need to make strategic decisions concerning key elements in the system including harmonisation of a number of areas across the GCC to make the VAT system fully efficient and compatible with the requirements of a common market" said Jeanine Daou partner and Middle East leader for indirect taxes and fiscal policy.

In addition a certain level of harmonisation of rules and simplification across the GCC will help reduce VAT compliance costs for GCC businesses which would contribute significantly to increasing the competitiveness of GCC companies said Daou.

"Another important area of focus for the UAE and GCC governments is to build an effective the tax administration to ensure a smooth and efficient VAT implementation" she said.

This will also require the right level of coordination across the GCC notably in terms of exchange of information as well as coordinated approach to monitor and control intra-community trade" she said.

The UAE currently shares an equal first place with Qatar in the overall tax ranking with a Total Tax Rate of 15.9 per cent 12 hours and four payments.

On December 6 the GCC agreed on key issues for implementing value-added tax in the region moving the six nations closer to introducing direct taxation for the first time.

Younis Haji Al Khouri undersecretary at the UAE ministry of finance said the target for introducing the tax was three years and that it would take 18 to 24 months to implement once a final agreement has been reached.

"We agreed on key issues to apply zero tax on healthcare education social services sectors and exempt 94 food items" Khouri said. In a couple of areas -- including financial services -- agreement was still lacking he said.

Introducing VAT would be a major economic reform in the GCC which have minimal tax systems and no tax on income although some levy fees such as road tolls.

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