Abu Dhabi: The UAE and Qatar are both ranked first as the least demanding tax framework globally, according to a report from the World Bank group and Pricewaterhouse Coopers (Pwc).
The report Paying Taxes 2015 says paying taxes has become easier over the past year for medium-sized companies around the world. The time it takes an average company to meet its tax obligations dropped by four hours last year. The report also revealed that the total amount the average company paid in taxes and the number of payments it made also declined in the past year. This is a trend seen every year over the ten-year period covered by the publication, Pwc stated in a statement. Paying Taxes 2015 measures all mandatory taxes and contributions that a medium-sized company must pay in a given year.
According to the report, the Middle East continues to be the least demanding tax framework in the world, with an average Total Tax Rate of 24 per cent. 16.8 average number of payments and an average time to comply of 160 hours.
According to the report, the UAE has a Total Tax Rate of 14.8 per cent, 12 hours and 4 payments. Qatar has a total tax rate of 11.3 per cent, 41 hours and 4 payments.
It finds that on average, the standard company studied has a total tax rate (as defined under the Doing Business methodology) of 40.9 per cent of commercial profits. It makes 25.9 tax payments per year and takes 264 hours to comply with its tax requirements.
The time and the number of payments required to comply with tax obligations have fallen over the ten-year period, as has the average total tax rate. The fastest rate of decline for the total tax rate occurred during the financial crisis from 2008-2010 with an average decline of 1.8 percentage points per year during that period. The rate of decline then started slowing in 2011.
Commenting on the report Dean Kern, Partner, PwC’s Middle East Markets, Tax and Legal Services Leader said: “The Paying Taxes report helps inform the discussion around tax reform, a topic which is very relevant for governments in the region who need to respond to megatrends impacting us; such as rapid urbanisation, demographic changes in addition to achieving sustainable government fiscal positions.”
Jeanine Daou, Partner and Middle East Leader for Indirect Taxes and Fiscal Policy said that the Middle East tax environment remains the least demanding, but the region needs to work hard in improving the use of electronic filing and payment mechanisms.
