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The business of… Tax in the GCC

From corporate income tax in Saudi Arabia to social security tax in Kuwait, Kipp takes a look at how the citizens of the Gulf are taxed.

September 9, 2010 2:17 by

UNITED ARAB EMIRATES

CORPORATE INCOME TAX

  • The UAE does not impose a federal corporate income tax, but some emirates have issued their own decrees. In practice, taxes are only enforced on foreign oil companies and banks.
  • The tax rate for oil companies is generally 55 percent of operating profits, but the actual tax amount is based on a rate agreed in individual concessions. The rate can range between 55-85 percent.
  • Branches of foreign banks are taxed at 20 percent of their income.

MUNICIPAL TAX

  • Most emirates impose municipal taxes on annual rental payments. The municipality tax rates are 5 percent of residential rent and 10 percent of commercial rent.
  • In Dubai, a 10 percent tax is applied on hotel revenues, a 10 percent fee on commercial property rents and a 5 percent fee on residential property rents.
  • Abu Dhabi does not levy a municipality tax on rented premises, but landlords are required to pay certain annual license fees.

PRIVATE INCOME TAX

  • Income tax is not imposed on individuals.

CAPITAL GAINS TAX

  • Capital gains tax is not imposed on individuals.

LAND REGISTRATION FEES

  • A fee is levied on a transfer of ownership of land in Dubai at a 2 percent of the sale value of the property.

VALUE-ADDED TAX

  • There is no VAT levied in the UAE, although its introduction has been discussed several times in the past.
 

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