Income tax in UAE: Impact on expat professionals and businesses in the country

  DUBAI - What would expatriate professionals do if income tax were introduced in the UAE? Eighty percent of professionals recently surveyed by CFA Society Emirates said that they would consider moving abroad if an income tax were to be introduced. Majority of them said that the GCC’s tax-free environment was a key factor in their decision to reside here, and VAT costs would definitely drive them away. A GCC-wide initiative will see the introduction of VAT in the region in 2018. While a rate of 5 percent is expected across the region, the actual regulations still remain unclear. Will an introduction of corporate tax cause companies to relocate? Fifty-nine percent of respondents don't believe so. It is expected that the new regulations will not only have an impact on current business processes, but will also have a commercial impact on businesses with pricing issues and compliance just some of the main issues. Further, the lack of indirect tax history in the region means that experienced professionals are few which will result in businesses having to decide whether to outsource the function, pay a premium to recruit experienced professionals or spend on training for existing staff. The UAE is expected to generate around Dh10 billion to Dh12 billion as a result of introducing VAT in the first year of its implementation. MFD/Expat Media   Also read: VAT in UAE - Which items will be most affected