Tax in GCC
- Overview of tax in GCC
- Taxes in UAE
- Taxes in Saudi Arabia
- Taxes in Qatar
- Taxes in Oman
- Taxes in Kuwait
- Taxes in Bahrain
Overview of tax in GCC
The Gulf Co-operation Council (GCC) region remains an attractive jurisdiction for foreign investment due to the favorable tax regimes in most GCC countries.
The different types of taxes include the following:
Excise tax is a form of indirect tax levied on specific goods which are typically harmful to human health or the environment. These goods are referred to as excise goods.
The aim of excise tax is to reduce consumption of commodities deemed harmful for human consumption, whilst also raising revenues for the government that can be spent on public services.
These kinds of taxes are often levied upon alcohol, cigarettes, gambling and so on.
A value-added tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.
A VAT is levied on the gross margin at each point in the manufacturing-distribution-sales process of an item. The tax is assessed and collected at each stage, in contrast to a sales tax, which is only assessed and paid by the consumer at the very end of the supply chain.
An individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns throughout the year. The tax is generally imposed by the state in which the income is earned.
Income tax is mostly used to fund public services and pay government obligations.
A corporate tax, also called corporation tax or company tax, is a direct tax imposed by a jurisdiction on the income or capital of corporations. The tax may also be referred to as capital tax.
Double Taxation Treaties
Double taxation is defined when similar taxes are imposed in two countries on the same taxpayer on the same tax base, which harmfully affects the exchange of goods, services and capital and technology transfer and trade across the border.
A tax treaty is a bilateral (two-party) agreement made by two countries to resolve issues involving double taxation of passive and active income of each of their respective citizens. Income tax treaties generally determine the amount of tax that a country can apply to a taxpayer’s income, capital, estate, or wealth. An income tax treaty is also called a Double Tax Agreement (DTA) or Double Tax Treaty (DTT).
Capital Gains Tax
Capital Gains Tax is the tax which is due as a result of the financial gain (often referred to as profit) received once an asset is sold or disposed. The total gain is calculated by subtracting the sale value from the original purchase value. The rates are 0%, 15%, or 20%, depending on your tax bracket.
Property Transfer Tax
A transfer tax is a tax on the passing of title to property from one person (or entity) to another.
In a narrow legal sense, a transfer tax is essentially a transaction fee imposed on the transfer of title to property from one entity to another. This kind of tax is typically imposed where there is a legal requirement for registration of the transfer, such as transfers of real estate, shares, or bond.
An inheritance tax is a tax imposed by certain states on those who inherit assets from the estate of a deceased person. Its tax rate depends on the state of residence, the value of the inheritance, and the beneficiary’s relationship to the decedent.
zakat -Under the Islamic law, this is a payment made annually on certain kinds of property which is used for religious and charitable purposes, which is one of the Five Pillars of Islam.
Only imposed on Muslims, it is generally described as a 2.5% tax on savings to be donated to the Muslim poor and needy. It was a tax collected by the Islamic state.
Municipality tax (or rental tax) refers to the housing fees charged by the government department responsible for public facilities. It is your annual rental property tax. It is imposed on all non-citizen residents who rent apartment and is included into the bill for public utilities.
A stamp duty (stamp tax) is a tax a government imposes on documents that are required to legally record certain types of transactions. Governments have imposed stamp duties on a variety of documents, related to the sale or transfer of property, real estate transaction, marriage licenses, patents, securities, and copyrights.
A physical stamp which is also known as the revenue stamp is impressed or attached on the document to denote that the specific stamp duty has been duly paid before the document became legally effective.
Governments impose these taxes as a source of revenue to fund government programs and activities.
Customs Duty is a tax imposed on imports and exports of goods. The government uses this duty to raise its revenues, safeguard domestic industries, and regulate movement of goods.
While revenue is a paramount consideration, Customs duties is imposed to protect the domestic industry from foreign competition.
A tourist tax is any revenue-generating measure targeted at tourists. It is a means of combating over tourism and a form of tax exporting.
Tourism taxes are small fees usually levied indirectly through accommodation providers or holiday companies, and typically aimed at overnight visitors.
Tourist tax is levied by restaurants, hotels, hotel apartments and resorts.
A withholding tax is an amount that an employer withholds from employees’ wages and pays directly to the government. The amount withheld is a credit against the income taxes the employee must pay during the year.
Is Withholding Tax bad?
Most people don’t give a second thought to today’s tax withholding system, but taxes haven’t always been withheld at the source and there are compelling criticisms of the withholding system. In general, tax withholding is good for the government and bad for taxpayers.