A combination of direct and indirect taxes will be imposed in the UAE and GCC in the near future because of low oil prices, adding to new resources to fund budgets, explained by tax experts.
Experts insisted that new taxes can be imposed on wealth, property, and corporates. These proposition will be implemented one at a time.
Moreover, income tax will be on the line but it will not be prioritized, they added.
Dr Rasheed Al Qenae, head of tax at KPMG Middle East and South Asia and managing partner at KPMG Kuwait, said “Looking at the budgets and oil prices, GCC governments will have to introduce new taxes but they cannot bundle it in one go. They have to break down slowly. For example, in Kuwait, they mentioned about corporate tax and then on the far end it will be income tax.”
He explained that the GCC region is the primary stage of tax education and authorities will have to target other resources.
“In 10 years, we expect wealth, property and asset taxes can be levied in the region because it is not that the governments want to impose but because they will have to. They will come gradually and take time. Now governments are focused on introducing value-added tax across region. Once that is stabilised, they will think about others,” Al Qenae said in an interview.
Furthermore, luxury tax will also be considered in the future.
“First it is going to be VAT and then on top of that will be luxury tax. This is very clear in developed markets and it is called luxury tax,” he added.
The UAE, Saudi Arabia, and Bahrain has imposed 5 percent VAT on goods and services. The UAE has imposed 100 percent tax on tobacco and energy drinks. An added 50 percent for carbonated drinks. Starting on December 1, the sin tax will cover shisha and other drinks that contain sugar.