Historic G7 deal could mean bigger tax take for Gulf economies

Historic G7 deal could mean bigger tax take for Gulf economies

DUBAI: An agreement among the Group of Seven (G7) advanced countries to set a minimum global corporate tax rate of 15 percent is expected to have far reaching implications for Gulf economies as they seek to attract multinationals. Japanese Finance Minister Taro Aso on Tuesday told reporters that countries realized they could no longer rely on the race to the bottom on corporation tax cuts to generate growth in their economies. "Now that the course of direction has been shown, the possibility (of a tax deal) will rise at G20. It had a big impact on raising the momentum,“ Aso said. The G7 comprises the US, Japan, Germany, Britain, France, Italy and Canada. The larger G20 also includes Saudi Arabia, the only Gulf country in the group. Analysts expect the adoption of the new rules to gradually change the regional tax base with the move likely to affect some Gulf economies more than others depending on the number of multinational corporations operating in them. 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