Tuesday, December 30, 2008

The dreaded T word rears its ugly head

The six Gulf nations have agreed in principle to implement corporate and individual income tax by 2012 and are now discussing ways to bring the deadline closer, people close to the matter told Emirates Business yesterday.

The front page story in today's EmBiz247 has hit the radio news bulletins and attracted plenty of comment from listeners throughout the morning.

It's the final confirmation of something I've talked about in the past, that Dubai will become just one option among many on the expat job circuit.

We're almost there now, with the increasing rents, inflation, less generous salary packages, fees & charges for so may things.

The days when Dubai, and the other Gulf cities, were places to go to earn heaps of money to set yourself up for life have gone. They went for most people probably four or five years ago.

Personal income tax, even though it's likely to be as low as say Hong Kong or Singapore, is the final step.

So the Gulf cities will lose their edge and simply be another option for expats to consider. Hong Kong, Singapore, KL, London, New York, Dubai, Bahrain...

And that's when they'll really have to compete at a facilities and lifestyle level.

If your net salary would be the same in, say, Hong Kong, Singapore and Dubai, your decision will be based on which city offers the best lifestyle. And that covers a multitude of issues, not only leisure facilities such as beaches and restaurants but things like personal freedoms and equitable laws.

There's a lot of work to be done.

The full EmBiz247 report is here.


hemlock said...

to be honest, the only thing that bothers me about this place is the weather; what's the point of having a beach if i cant visit it 6/12 months.
dubai allows me to live in a relatively secure bubble with a 'khalli walli' attitude... the only thing i find this place has going for it.
the taxes, i wouldnt mind so much.

rosh said...

To be honest, am fine paying taxes or saliks etc. I mean the country has got to function - pay for all that infrastructure etc.

However, I do hope with taxes comes an amount of representation and stability - no not, calling for naturalization of any sort, instead an opportunity to reside without it all dependent on some job visa. Especially those who've spent a lifetime or have grown up here.

I live in NYC - and to be honest, I've done quite well, beyond what I had hoped for. I know I shall never have it that good in the UAE - NYC is a different league. I keep coming home every Christmas because it's home. Not becuase of the fuloos or taxes.

Cat Russell said...

My husband and I discussed this yesterday after it was on the radio here, and I agree with what you say, it will make Dubai and the Gulf states potentially less attractive to expats in the long run.
I don't have an issue with paying tax per se, as long as you get your money's worth. I come from a country where my tax rate was over 40% and it went into a big black hole with nothing to show for it. Tax should make the wheels go round in an ideal world and be spent in part on infrastructure, transport or whatever. If they look at implementing tax here then some changes will need to be made in Dubai, most importantly housing costs will have to stabilise and tenants will need more protection. The cost of living here is already high with many hidden costs that already feel like a tax (10% government levies and 10% service charges on meals in hotels and restaurants (whether service good or bad), national ID costs, visa costs, salik costs, etc). There will need to be a rethink on some things most definitely. Good posting!