Historic G7 deal could mean bigger tax take for Gulf economies

Historic G7 deal could mean bigger tax take for Gulf economies

It also represents a potentially delicate balancing act for Arab governments trying to attract increased foreign direct investment. "From a GCC context, greater clarity is needed to gauge any potential economic impact,“ ADCB chief economist Monica Malik said in a note to clients. "We still see the region remaining a low tax environment “” both on a corporate and individual basis. However, for companies that will fall under the new framework (likely centered on digital businesses) the impact could be significant. In the medium term, the global tax developments could result in a broadening of corporate taxes in the region, especially if an international base is established, alongside greater tax income from large multinationals.“ Gulf economies have long attracted both individuals and companies through either no or low taxation. However ongoing reforms aimed at providing more stable government revenue streams and a reduced reliance on hydrocarbon revenues have already placed a greater emphasis on taxation “” most notably with the recent introduction of value added tax in countries such as the UAE and Saudi Arabia. Corporate taxation was also one of the big themes of last year's Saudi presidency of the G20. Saudi Finance Minister Mohammed Al-Jadaan welcomed the agreement