The UAE’s finance minister has rebuffed reports the government has plans of imposing income tax on individuals or companies to fund any fiscal deficit.
Sheikh Hamdan bin Rashid al Maktoum said the Ministry of Finance has not included any tax plans in the 2012 budget or intends to introduce in the following fiscal years, adding that a study on the socio-economic effects of any proposed taxes on companies operating in the second largest Arab economy is underway.
“The federal government has no plans to impose income taxes or new government services fees whether on individuals or companies in the 2012 budget or the following fiscal years,” Albayan newspaper quoted him as saying.
“We are currently updating previous studies on the economic and social effects in case new taxes are proposed in the future….this updating is intended as a future indicator and does not mean we have decided to introduce taxes.”
Sheikh Hamdan, also the deputy ruler of Dubai, said the UAE is in collective talks with its six-nation Gulf Cooperation Council (GCC) partners over proposals to introduce VAT taxes, adding that the plan is still in the “discussion stage.”
He added that the UAE, the world’s fifth largest oil exporter, does not need to impose taxes to finance its fiscal shortfall, which is below one per cent of 2012 budgeted expenditure of AED41.8 billion ($11.38bn) against revenues of AED41.4 billion ($11.27bn).
“Generally, all countries have budgeted deficits but by the end of the fiscal year, we find that there is no actual deficit…we still have enough financial resources to finance the budgeted expenditure,” he concluded.