Generating Revenue – TAX

Taxing expats = axing expats –

A tax-free environment in the GCC has attracted many people to work here but this may change if taxes were to come into force, say experts.

Qatar has taken the bold step of imposing taxes on profits generated by foreign companies. Kuwait had done so a long time ago. For years, some Gulf Cooperation Council (GCC) countries have also been discussing the idea of introducing value added tax (VAT).

Until recently, some GCC countries were classified as tax-free heavens. This attracted huge foreign capital, including hot money which played a major role in GCC stock market speculation. The substantial amount of foreign capital also played an effective role in implementing large development projects.

Therefore, the tax issue is an important factor that is directly related not only to foreign capital, but also to keeping local capital inside the country.

In this regard, tax and fees play an important role in the economies of many countries. Taxation is one of the key components for revenue in industrial countries’ annual budgets. In such countries, the types and rates of tax can influence formal laws and legislation.

Expats in the GCC are the most likely to repatriate their property wealth, with very few investing in property in their host country. In GCC, 75 per cent of expats invest in their country of origin compared to 0 per cent investing in their HOST country.

Emerging economies have scored higher than their European counterparts as wealth hotpots when looking at economic factors including earnings, career development, improved economic outlook and the ability to save the survey showed.

In poorer developing countries, various taxes, as well as income tax, are imposed despite the lack of necessary tax regulations and controls to manage the complex process. This leads to tax evasion.

Taxation is considered a new experience for GCC countries who since the discovery of oil have financed their annual budgets and development programmes using oil revenues. However, it seems like this phase will soon come to an end.

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