x Abu Dhabi, UAEFriday 19 January 2018

UAE rates highly for ease of paying tax

A survey says the UAE is judged among the best nations when it comes to paying business taxes, but firms say it would be even better if it allowed companies to pay taxes online.

The UAE is one of the easiest countries in the world for businesses to pay taxes, a joint survey by the World Bank and PricewaterhouseCoopers (PwC) has concluded.

But creating a system to allow companies to pay their taxes electronically would make the process easier still, according to representatives of both organisations.

The UAE ranked fifth behind the Maldives, Qatar, Hong Kong and Singapore in terms of ease of payment, according to the Paying Taxes 2011 report, released yesterday.

"The UAE ranks right up there in terms of ease of paying taxes," said Dean Rolfe, the tax partner and Middle East tax leader of PwC.

"In many jurisdictions there are multiple taxes on profit, consumption, labour and other taxes including on property, road or infrastructure."

The report also judged the UAE as having the seventh-lowest tax rate, with businesses taxed at 14 per cent of their profits.

The annual report measures the ease of paying taxes by assessing the administrative burden for companies to comply with regulations, and by calculating total liability as a percentage of pre-tax profits. In the UAE, as with all countries, the report applies to taxes levied against local companies and employees.

The survey found it takes as little as 12 hours a year for companies to comply with paying monthly social security taxes, levied at 12.5 per cent on UAE employment. The tax is regulated at a federal level by the General Authority for Pensions and Social Security (GAPSS).

The report found there tended to be fewer taxes in the Middle East than in any other region globally. But it concluded that paying taxes was easiest for businesses in high-income economies that had the lowest tax cost and the lowest administrative burden.

More mature systems, a lighter administrative touch and greater use of electronic systems made it more straightforward.

"A modernisation of the tax procedure in the wider region would be a good way of easing the administrative burden on companies in the region," said Mr Rolfe.

"Where companies have to rely on hard-copy paper systems, that has an impact on the business as it takes a lot more time to pay taxes."

In the UAE this would involve introducing of systems to enable companies to pay taxes electronically, a step already taken by Qatar's government.

Tunisia, the economy that improved the ease of paying taxes the most, implemented electronic payment systems for corporate income tax and value added tax, broadening their use to most companies.