Dubai Ruler Quashes Speculation Over Tax

by Lorys Charalambous, Tax-News.com, Cyprus

22 November 2005

General Sheikh Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and the Defence Minister of the United Arab Emirates has assured Dubai's investors and residents that the authorities are not planning to introduce new taxes in the emirate, following recent speculation in the regional press which suggested otherwise.

“We do not have tax (and) we do not need to have tax," the General told the Khaleej Times following the Dubai Air Show at the weekend.

Speculation that new taxes would be introduced in Dubai intensified following the news that increases in property rents will be capped in order to ease rising cost pressures on firms, and to curb inflation, which could reach 20% in 2005 according to the National Bank of Dubai.

The reports were seemingly confirmed when Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance and Industry told the Khaleej Times in a report last week that: “We are (still) under discussion (and) we have not decided yet. They are just bringing the idea (of levying tax).”

Moreover, the recent revelation by Shaikha Lubna Al Qasimi, the UAE's Minister of Economy and Planning in an interview with Reuters that the government is studying a plan to introduce sales tax on tobacco and alcohol from next year fuelled the speculation still further, with many observers interpreting the decision as a first step towards more general forms of taxation.

However, the Dubai ruler's words would appear to suggest that the emirate will at least remain free from income taxes for non-oil firms and individuals for the foreseeable future.

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