Middle East’s tax reforms are in step with the times

Middle East’s tax reforms are in step with the times

As economies evolve, so do tax philosophies, principles, and regimes. Several factors influence this transformation – political ideologies, economic theories, social values, and technological advancements being some of them. In other words, shifting tax philosophies reflect the changing ideas and beliefs underpinning how governments design and implement tax policies over time. A combination of these factors is unfolding in the Middle East.

Following the 2008 global financial crisis, countries in the region strengthened their tax structures and increased revenue, focusing on reducing reliance on oil revenues and diversifying the economies. They also understood the value of raising taxes, especially in non-oil sectors. This approach resulted in Saudi Arabia and the UAE introducing a 5 per cent value-added tax (VAT) in 2018.

Middle Eastern countries have also recently reformed their tax systems to improve efficiency. Measures such as introducing electronic tax filing and payment systems, simplifying tax procedures, and improving tax administration have gathered momentum. Steps have been taken to combat tax evasion, improve compliance, and enhance tax audits.

There has been an overall shift toward strengthening tax structures, increasing revenue, and diversifying economies away from oil dependence. Considering how regional and global economies have evolved since 2008 and how they align, the region