Oman is the only country that has a broad-based business profit tax.
Oman is the only country that has a broad-based business profit tax.

IMF Says (P)GCC Should Impose Up to 15% Corporate Tax

IMF Says (P)GCC Should Impose Up to 15% Corporate Tax

The (Persian) Gulf Coopertion Council countries should consider introducing a corporation tax on business profits as part of measures to boost non-oil revenue in the coming years, the International Monetary Fund has urged.
An IMF policy paper said that an overhaul of the taxation of business profits in the (P)GCC Arab states (Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman), for instance a 10-15% corporation tax, “would contribute to improving non-oil tax revenue collection”, Arabian Business reported.
The paper noted that non-oil corporate taxes apply for the most part to foreign companies only and range up to 20% in Saudi Arabia. Oman is the only country that has a broad-based business profit tax, it said.
However, extending these taxes to domestic businesses–together with the planned introduction of other fiscal reforms such as value added tax by 2018–would help (P)GCC Arab states as they grapple with falling oil revenues and an uncertain global economy.
The report said: “Over time, the (P)GCC countries, which have intensified their efforts to diversify budget revenues as part of their broader fiscal consolidation strategies, should also move to introduce or expand the tax on business profits.
“This, together with the VAT and excises will help ensure efficient and progressive tax systems in the region and generate the bulk of non-oil tax revenues for most countries’ budgets.”
The IMF urged any business tax to “start simple and be levied at a single (relatively) low rate for all businesses”.
“This rate could be in the range of 10 to 15%…a relatively low rate when compared globally,” the report said.
“A rate lower than 10 to 15% range is likely to yield too little revenue and may not be cost-effective, while a rate higher than this range may make the (P)GCC economies relatively less attractive as a business domicile.”
The revenue from the new tax will likely vary across countries in the GCC, according to the IMF. It is expected to be higher in Bahrain, Oman, the UAE and Saudi Arabia, and lower in Qatar and Kuwait where the hydrocarbon sector contributes a larger share in GDP.
The revenue yield will also be affected by existing exemptions and deductions and depend on how effectively the tax is administered.
However, the IMF said the Persian Gulf Arab states would do well to introduce the reforms as early as possible–or at least once VAT has been successfully introduced.
“Experience from other countries shows that it takes time to build tax administrations or revenue agencies and to develop relationships with taxpayers that encourage self-compliance,” the report said.
“This is why the reform process should be started as early as possible.”

Short URL : https://goo.gl/BiifJd
  1. https://goo.gl/EGJL1w
  • https://goo.gl/N1zONx
  • https://goo.gl/L4e0tO
  • https://goo.gl/ZAT0ll
  • https://goo.gl/ExMC2M

You can also read ...

The 2017 “WannaCry” cyber attack demanded affected users wire ransom money via Bitcoin.
You don’t have to be a digital whizz kid to know that the wars...
A woman protests a planned coal-fired plant  in southern Thailand.
Southeast Asian governments are finding themselves caught...
Malaysia has shown willingness to move towards  a market-oriented mechanism.
Forty-three World Trade Organization members who participated...
Singapore to Hike GST for First  Time in Decade
Singapore is expected to raise goods and services tax for the...
South Africa Wants to Increase VAT Rates
With an economic downgrade to junk status, a slowly growing...
62% of Japan Loan Rate  Below 1%
After two years of the Bank of Japan guiding key interest...
Fitch Upgrades Greece
Fitch Ratings raised Greece’s sovereign credit rating by one...
China’s Commerce Ministry says the proposed US measures are groundless.
China said proposed US tariffs on imported steel and aluminum...

Add new comment

Read our comment policy before posting your viewpoints