31 December, 2008

Income tax in the pipeline?

Zawya
The six Gulf nations have agreed in principle to implement corporate and individual income tax by 2012 and are now discussing ways to bring the deadline closer, people close to the matter told Emirates Business yesterday.

The oil- and gas-producing countries are grappling with the prospect of a significant contraction in energy income from oil and gas exports next year and the spectre of budgetary deficits.

People close to the action at the GCC summit in Muscat, Oman, that began yesterday said, however, that individual members of the Gulf group are unlikely to impose income tax unilaterally.

"However, the prospect of drastic reductions in oil revenues and the resultant fiscal deficits has forced the six countries to examine whether implementation can be done earlier than 2012," they said.

31 comments:

A Blessing in Tragedy said...

This is long over due.

Dubai Entrepreneur said...

Agreed.

Ronnie Abdullah said...

And what will we get in return for the income tax that we pay to the government? Free education and health care? Democracy? Representation for the expats that do all the work round here?

Or do the leaders of this country just want to squeeze more money out of us hard-working expats to waste on their dear 'nationals'?!

Dubai Entrepreneur said...

Ronnie,

With taxation come a lot of other things that are at the root of the delay (although not often discussed in public). When taxes come in effect, it means that those who pay it have a lot to say. Issues of citizenship and neutralization come to mind. When an expat leaves, they don't just leave a job vacant only.. there will be tax money that's missing.

Expats leaving Dubai because it's too expensive would have a far more significant impact than what it already does. All these variables would have to come to play. It would be interesting to see how they handle it.

A Blessing in Tragedy said...

hard-working expats

Never seen one of those.

You would get EVERYTHING you have been getting for free thus far and not a single thing more.

For 37 years, you have been getting free roads, free and semi-free utilities (you dont pay to have your trash collected, do you?) free security (police, fire...)

Free education (Yep, foreigners get free government education as well here, that will now cost you... the price? your taxes)

Just as I, a resedent paid 23% tax in the US, and got only the above, you will pay 5% here, or leave.

Simple. Dont let the door hit you on the way out (oh, and democracy is probably the worst form of government ever, and just as in the US, I paid taxes and had NO right to vote, a citizen may vote, not a resident)

As for naturalization, lol. It's getting HARDER, not easier, and thats because with each generation Emaratis see the mistakes our fathers and theirs made.

Our goals are a day when NO foreigner may be made a citizen, even with the biggest Wasta.

Dubai Entrepreneur said...

hard-working expats

Never seen one of those.


You know you have!

For 37 years, you have been getting free roads, free and semi-free utilities (you dont pay to have your trash collected, do you?) free security (police, fire...)

Umm.. actually, no, I believe I am paying for it. I pay for toll gates, I pay for parking tickets due to inadequate parking space, I pay a tax on my rent for utilities.. I'm not sure where you are getting your information. To be honest, I pay a lot more here than I paid in the US, minus the respect.

Just as I, a resedent paid 23% tax in the US, and got only the above, you will pay 5% here, or leave.

I'm not sure what your status was in the US. However, I got paid back every cent the IRS took from me when I was a student working there. Had I been on an H1 visa, it would have been different.. but then I would have been on my way to establish permanent residency, followed by citizenship. There is no such path here.

ABIT, seriously though.. don't get me wrong. Emirati citizenship is something I am not even remotely attracted to. It does not interest me in the least, but I think this is an issue that polarizes people.

I also think comparing the UAE with the US is not a balanced comparison. The US's population is not made up of expatriates.

Anonymous said...

"hard-working expats

Never seen one of those."

you bragged on and about indians at work on an earlier post, didn't you.

i am not sure where you lived in arizona and some comments makes no sense. 20 somethings seem oblivious arrogance and stupidity comes at a price.

Anonymous said...

It is news to me that foreigners get free government education.

I remember reading that a small proportion of low income Arab expats could enroll their kids...but that is it. Please clarify?

Anonymous said...

Expats are already taxed, they just don't call it that.

Dewa fees, car registration, visa renewals, visa fees for families, national ID card fees to name but a few...

I don't have a real problem with it as all governments need to have revenue raisers...but lets not claim we've been getting everything for free.

POLIUY said...

UAE Gov especially Dubai is sucking the life out of expat by introducing TAX( the last thing we wont)

You would get EVERYTHING you have been getting for free thus far and not a single thing more.

----For 37 years, you have been getting free roads, free and semi-free utilities (you dont pay to have your trash collected, do you?) free security (police, fire...)-------

Dude ur family must be having food & shelter with all the visa,medical,road-fees,parking rent we pay...

ok so dont talk foolishly wonder if were in the US or some remote desert......

Anonymous said...

DE

One should understand that Abit has just a bit less of grey matter or prhaps only a bit of the same. Hence one should make the necessary consideration when reading his comments.

-FR

Anonymous said...

You wouldn't even have roads without the expatriates, accept the expatriates because you don't have a choice, you can't even drink without them!!!! If taxes are implemented it will be the end of such economies. Anyways the expatriates are not looking for your nationality,keep it for ur self.

Kemal said...

If we do have to pay taxes, then we have the right to demand proper services. The police force here is a joke - more like the keystone cops, if you ask me.

ColOman said...

why should we pay tax........... I would rather not have democracy if it means I need to pay taxes..... If we do pay tax we need to question every fils spent by the gov.

Anonymous said...

Housing fee, car registation, DEWA bills, visa fees (my housemaid's visa costs Dh5000, plus Dh5000 deposit, if I were an Emirati it would cost Dh500), Salik, school fees (please send me a list of institutions where my two boys can go to school for free because I am yet to find one), rent, ID card fees, e-gate, private health insurance (compulsory now for expats) plus govt health card. I could go on. Please don't tell me we get anything for free here.
So which of those is going to be subsidised by my taxes? I would hazard a guess at none.

A Blessing in Tragedy said...

"hard-working expats

Never seen one of those."

you bragged on and about indians at work on an earlier post, didn't you.

I dont consider Indians "Expatriates" I would really not have an issue with Indians being made permanent residents. I have yet to meet one who was not qualified for what he does, and does it well.

British, Americans, French. Eh. And foreign Arabs are the worst. Thinking that being Arab means they are better than say, an indian foreigner..

Why should you pay taxes? Dont, and get thrown in jail and then deported.

Bitch as you like, when taxes do come into effect, it will be THE LAW. Break it, and pay.

I was actually on an F1 Visa. Student status, and ended up paying taxes. How that was possible? Ask uncle sam. But I did it, without question. Its their country, and I have no right to complain.

Oh, so my posts need to be read with a grain of salt because they contradict your own beliefs? I see that you, not I, are the child. Crying the second someone says something you dont agree with.

And the fact remains, if this place is sucking you dry, you wouldnt be here. you'd leave. and if you do, Im sure a 1000 others would kill for your job, as this country still pays better than whatever hell hole you came from.

Fact, if your own country could do its most fundamental duty, take care of you, you would not be here.

So stop the bitching.

And if you were offered true UAE citizenship, not just a passport, but a family book as well, NOT ONE OF YOU would turn it down.

No, Gvt schools are completely free. They used to charge not Emaratis 200 dirhams a YEAR. They dont anymore. Its 100% free. If you dont want your children in govt school, thats your call.

Dewa fees, car registration, visa renewals, visa fees for families, national ID card fees to name but a few...

And I pay all those fees as well (Minus the VISA fee of course) Just paid the fee for the god damn ID card (Which I believe is pointless) last week. ADWEA fees as well... I only benefit in what the govt has deemed its job to offer its nationals, or what it has decided to subsidize for its nationals.

Like I said, Dont pay the taxes. Ill visit you in jail.

A Blessing in Tragedy said...

Housing fee, So you want the Govt to pay for your housing? Do they do that where you come from for foriegners? No. Probably dont do it for citizens either.

car registation - So this is free where you are from? No. I highly doubt that as well.

DEWA bills - Dont make me laugh, I dont think any country outside of maybe the KSA doesnt charge for YOUR bills.

visa fees (my housemaid's visa costs Dh5000, plus Dh5000 deposit, if I were an Emirati it would cost Dh500) - Wrong, actually the deposit is 2000 for Emaratis. So there should be NO VISA fees now? Will your country issue me a VISA for free? Probably not.

Salik - Everyone pays this, nationals and residents alike. And you have the choice of keeping to non-Salik routes.

school fees (please send me a list of institutions where my two boys can go to school for free because I am yet to find one) - ANY government school, KG to 12th grade. Of course it is in Arabic and Islam is a regular part of the studies. So if you are a westerner, its not what you want, but the MAJORITY of govt school enrollees are foreign Arab nationals.

rent - And your govt pays this for you? if you worked for the govt they actually to includ living for many of their employees.

ID card fees - Ill pay the nominal fee for you if you like.

e-gate - I have no idea what this is, but chances are its not a nEED, and if it is, its something everyone pays and wouldnt be paid for you by your govt.

private health insurance (compulsory now for expats) plus govt health card - Is it my fault, or the gov's fault that your employer is stingy and your package didnt include this? So healthcare is given out to foregn nationals in your country? No.

I could go on. Please don't tell me we get anything for free here. - Do you pay for the roads? Police? No. You probably do in your country though. And as I said, you probably charge residents as well.

So which of those is going to be subsidised by my taxes? I would hazard a guess at none. - You are right, NONE. Because hardly any of them are govt issues. Your private school fees? Please. Salik? Again, use other roads.

As for things like power, water. gas... all are already subsidized. Not as much as before, and that is the problem. You all got so comfy with the govt here subsidizing everything, from Gas to vegetables. That you are now bitching for having to actually pay for everything.

Again, if you dont want to, leave. If you dont wish to after its a law, dont, Ill visit you in prison.

Terrified of Nothing said...

Dubai made 7+ million AED in 4 days of traffic "fines". They say it is to make roads safer that they collect these fines, they talk of the dangers of speeding.

What is *really* dangerous is the dark tints, weaving through rush hour traffic with abandon. What is *really* dangerous is the dark tints planting themselves 2 cm from your rear bumper. What is *really* dangerous is ALL of the people yapping away on cell phones barely able to maintain their lane.

Controlling these is KEY to making UAE roads safer. Until they do this, the speed cameras is just a fancy taxation system. Period.

Dubai Entrepreneur said...

ABIT,

I am tempted to leave this thread, as emotions seem to be the main variable here.

Taxation takes many forms, here and elsewhere. Paying a percentage on my rent to DEWA is a tax. No one expects the government to subsidize their electric and water usage. Well, at least expats don't. I am happy to pay for services rendered. I am also happy to pay taxes (I am a big fan of income tax).

What is happening here is a transaction between expats (customers) and the UAE government. I am oversimplifying here, as the customers are also providers of services to the UAE.. but let's just keep it simple for the sake of argument.

When I pay for services (taxes), I have a right to raise issues and concerns. If the service is not up to my standard, I will ask questions. Asking questions and raising concerns is a natural part of any relationship. Nothing strange here.

The restaurant manager may end up kicking out the patron if they no longer want to serve him, but this is not something you will see often. No matter what, the restaurant manager knows that this patron will go out and spread the word. Although the single individual may not matter, the collective will. The patron also knows that if he loses his relationship with the restaurant, he may never be able to eat there again..

This is why the "if you don't like it leave" attitude is not the most business constructive attitude. Of course people will leave if they don't like it. This is an obvious but undesirable solution. Neither party want things to end like that.

However, as you charge more, the voices of those paying will get louder, demanding more. This is a very natural thing to happen. Dealing with those demands is what the government should be planning for.

For the record though, with all due respect, I reject the very notion that anyone and everyone wants UAE citizenship. I think you are severely underestimating the pride a lot of us take in our home countries. The relationship I have with the UAE is a purely business-based one. Nationality and citizenship takes this relationship to a level that I don't find to be sustainable.

Besides, you would really have to be in bad shape to opt to become a second-class citizen in the UAE.

Anonymous said...

i agree with dubai entrepreneur

Anonymous said...

DE has it spot on. And does Terrified of nothing

A primary aim of a government is to keep its citizens safe.

10 times the death rate on the roads in the UK, 6 times that in america - and what it they do? Instead of collaring reckless and dangerous drivers, they erect cameras to make more money.

And build yet wider wider faster roads to allow more weaving, to poor standards, and remove hard shoulders so when accidents happen more people die.

hemlock said...

ABIT: Fact, if your own country could do its most fundamental duty, take care of you, you would not be here.

So stop the bitching.


hahah! i love it.

e-gate card, btw, is a facility the immigration people are offering which allows you to skip the passport stamping lines and records your entry and exit to and from the country.
it isnt necessary. frequent travellers just find that it cuts their time at immigration counters, so they choose to pay AED 200 annually (i think).

Anonymous said...

Rera unveiled its Ejari website last week, upon which it is now compulsory to register all rental contracts. While the exact cost of this registration hadn’t been finalized, Marwan Bin Galita, chief executive of Rera, said it would be around Dh100 per contract.

Owners, however, say the reality is far different as owners are also obliged to take part in a training day to learn how to use the software - this must be paid for.

“I contacted Rera about the registration. They told me that I must attend the one-day Ejari training programme, which will cost Dh2,000 per person to get an online user account. Only after that can I register my property,” an apartment owner told Gulf News. Rera officials were unavailable for comment on this.




are they gonna charge for using the crapper too ? waste disposal maintenance fees they'll call it.

I'ld be very worried as a tenant or new property owner in dubai right now, with real estate value plummeting the only way developers are gonna make any profit is through these suddenly sky rocketing "maintenance" charges

Steve said...

"ABIT: Fact, if your own country could do its most fundamental duty, take care of you, you would not be here.

So stop the bitching.

hahah! i love it. "

With the same token, if the Emirates could take care of itself, you, the citizens would not need half the world to help your country breathing.

Fact is, you are simply unable to do so.

Fact, the Emirates invite foreigners on contractual basis for expertise most of it's citizens are unable to provide, in exchange for money most able expatriates can make elsewhere.

Fact, your country is unable to take care of you or itself, without external help.

Hemlock, you are new to the Emirates? Should you choose to jump in on some self righteous, arrogant and immature local support wagon, you might want to think again.

hemlock said...

steve: this isnt about being new to the emirates. this is about acknowledging that every rational individual serves self-interests before anything else.

it's about recognizing that people make trade-offs - they give up something to get something of equal or more value. as soon as that equation loses balance, you change your circumstances.

for all the bitching and cribbing people do, if they had an option of having it 'better' elsewhere, they would leave. if they had that option and still didnt take it, that would just be - irrational.

the fact is, UAE DOES have a lot of things going for it, because if it didnt, 2000 expats-a-day wouldnt be flocking the immigration counters.

Dubai Entrepreneur said...

hemlock,

Let's do some straight talk, shall we? I want to leave the UAE. I want out, NOW. Unfortunately, I can't, given how much I have invested in the UAE already.

In order for me to leave, I would have to do a lot of things first (I have a business that I would need to either sell or hire someone to run -- both of which are very unlikely prospects). So, the fact that I am still here and drive up to work every day doesn't mean that I'm thrilled about being here.

I came because of promises and the hype Dubai generated about itself. I bought into it. Many people have. That's why there are people still making their way to the UAE, not because of what it offers -- but because of what it promises to offer in potential.

This trend is going to be reversed and then what? Everybody loses. I have been wanting to leave for a year now, but have been unable to. Don't get me wrong, I don't want to leave because I'm not financially comfortable. I have no issues there. Even with the crap happening around us today, we're still okay.

But, to think that people come or stay is a result of the UAE still having a lot to offer them doesn't really consider all the variables.

hemlock said...

DE: you sound like a genuine guy, and honestly, i dont want to say anything to piss you off.

you came to dubai because of what it promises to offer in potential...

you could hold dubai's marketing and false promises against it, or you could accept you were naive.
given scandals all over the world like madoff and yes, the junk bonds - even the best of us get tricked into seeing value where there isnt any.
and i wont hold that against you.
no one will invite you to invest in their country highlighting the absence of laws, structure, security, language barriers etc.

my only two bits are: ive heard a lot about botox/liposuction/laser surgery. the monthly dubai magazine has a million ads selling youth, beauty and images of perfection.
i choose to not buy into everything i read.

i only hope and pray that you are able to exit without incurring too many losses to your financial and personal wealth.

Dubai Entrepreneur said...

hemlock,

Thank you for your kind words. I don't think my decision to come to Dubai was naive. I don't regret coming here. As with everything that has hype around it, the levels of exaggeration vary.

All I am saying is, exiting is not as easy as entering. As the Egyptians say, "dokhool il 7amma mish zay khuroogu" (poor translation: entering the bathroom is not like getting out).

I'm a realist. I saw an opportunity and I went for it. I think I am fairly successful. I didn't make millions in quick cash. I started a company built on a solid foundation. It's not based on a get-rich-quick-scheme. I believe I've also added value to the industry I'm in.

However, I don't feel that I'm ready to handover the keys to someone else and hope they do a good job just yet. The environment now is also not one where people are throwing money around.

And even when people were throwing money around, they weren't interested in a company that showed decent growth. They wanted a company that would triple their investment in 6 months. I never wanted to get involved in things like that. As evident, they are shortlived and their end is often catastrophic.

So in closing, I don't hold promises about the 'Dubai Dream' against it or its marketing. On the contrary, this has played a very important role in my success. The Dubai Brand is a strong one and I benefit from it as a business. I do, however, occasionally feel disappointed when an authoritative figure comes out and makes clear and direct promises and statements which are then later contradicted by reality (too many examples to list and a whole other discussion). But that's part of life.

Kyle said...

(too many examples to list and a whole other discussion).

DE:

I don't know about others but I believe, it'd be an interesting & intellectual discussion. Why don't you put up a post here one of these days and we can all talk about home runs and hits & misses.

You ought to do it, Man, especially when it's (all) fresh in your head.

Anonymous said...

I'm surprised that in all the responses on this Post, nobody stated the key component of taxes being:

NO TAXATION WITHOUT REPRESENTATION!

Anonymous said...

Income tax is a bad idea. Why pay taxes when they will just be spent on big jets, worlds largest yachts and expensive whores.
It seems now expensive horses are not enough too. The UAE Royal families want to outdo abramovich in football spending.

They are starting to pay the largest salaries and make the largest transfers. They want to pay Kaka half a million pounds a week after buying for a hunded million pounds from AC milan. Care to mention sovereign wealth fund anyone? Dream on. UAE is just another Saudi in the making. Poverty is just around the corner.

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