05 October, 2006

Dubai is soaking VAT

VAT is the new crusher soon to come on the expat population of Dubai and UAE. Although I never considered Dubai tax free as the indirect-tax list is long and lengthy. Some people might disagree with some of the things categorized as tax by me but TAX is very much alive in UAE.

Now turning to VAT; VAT always favors the corporations and piles up wealth in government safes. Now lets see, inflation is killing, rents are hiking, fuel and grocery prices sky rocketing do the authorities see any money in expat workforces' pockets to be squeezed out.

Even if there is money my question is why the tax??? What will be subsidized for the expats. Residence Visa? Medical Care? Education (which is insanely expensive)? Housing ? Unemployment Safeguards? .. What exactly??? Not to mention what ills will come with VAT if it is not properly installed with a system of check and balances as pointed out by this GN article.

9 comments:

Seabee said...

Although in reality there are all the indirect taxes, we don't have the word 'tax' - the world still believes Dubai is a tax free paradise.

When VAT arrives, the word 'tax' is suddenly going to be alongside the word 'Dubai'. I wonder what effect that simple fact is going to have on Dubai's grand strategy for the future...

Keef said...

I'm sure the authorities are aware of the phrase 'no taxation without representation'!

bizzwhizz said...

i hope keefie

Al Sinjab said...

That was my first thought Keefie. But those being taxed won't be represented and I doubt they will receive any new benefits.

How will the government reconcile this? Can it be reconciled?

nzm said...

Although our local papers would suggest that it was the UAE's idea, it was at the recommendation of the IMF (International Monetary Fund) that the UAE and other Gulf States introduce VAT to reduce the dependence on oil funds. (While at the same time, levelling the playing field so that countries already charging tax could compete with the UAE!)

You can read more about it at:
Middle East Times
Khaleej Times
Property Frontiers - bottom of P5
Grapeshisha
Market New Zealand where they report that the IMF has recommended a 3-5% VAT - this report is quite an interesting read
Gulf Industry

Tim Newman said...

The additional revenues will serve only to make the fat lazy locals fatter and lazier, drive the non-fat lazy locals abroad, and further dissuade foreigners from coming to Dubai.

marwan said...

Who wants to be the locals will never be taxed? Why would they, they're already being subsidised by the government and let's face it - all of us.

The upshot of all this will more tanned dishdash fingers walking their way to their local Gargash and Al-Tayer dealerships.

bandicoot said...

I’m always wary of IMF recommendations, given their history, and this looks like yet another short-sighted proposal. I skimmed through the document and of course it’s typically pure economics; no mention whatsoever of any political or social concerns or other such issues; no forecast of how this will impact consumers. If you have time to kill, read the full original report here. The tables and graphs though look fancy!

Anonymous said...

VAT for Vendetta!

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