The federal government is wise to look at widening its revenue base, rather than rely on oil revenue as the overwhelmingly dominant source of government money for ever. This is why the Ministry of Finance is looking at a variety of indirect taxation options, such as a sales tax, and other areas like imposing duties on tobacco products. But given the healthy state of the UAE’s federal finances, these moves are not urgent at this time.

Nonetheless, Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance, outlined some new thinking this week when he pointed out that the government is also looking at developing a place in the bond market. The establishment of government securities would be a key tool to find alternative sources of funding for major infrastructure projects, said Shaikh Hamdan.

But for the many people working in the UAE it is good news that the ministry is not looking at imposing income tax. For an expatriate individual, one of the great benefits of working in the UAE is that there is no income tax even if the natural concomitant is that there are no free government services like health or pension arrangements, but the advantages outweigh these problems. Given the steadily rising costs in the UAE, it would be wise to avoid income tax, particularly when the government can find and develop all the other alternative sources of revenue that are open to it.