Press release

Paying taxes 2014: Middle East expected to continue balancing their need for sustainable tax revenues and attracting investment

United Arab Emirates, Qatar and Saudi Arabia retain the top 3 ranks

  • Average Total Tax Rate for the Middle East is the lowest globally, scoring at 23.7%, well below the world average of 43.1%
  • Average time to comply across the Middle East is 159 hours , well below the world average of 268 hours

UAE, 20 November 2013 — Economies around the world are adopting a range of policies as they strive to strike a balance between raising tax revenues and encouraging growth, according to a new report from the World Bank Group and PwC. This year, 14 economies significantly increased their total tax obligations or the amount of tax a case study company has to pay, while 14 others lowered theirs. In most regions around the world, the rate of decline in the total amount the firm has to pay in taxes continues to slow. The study also reveals that since the study was initiated nine years ago, corporate income taxes have consistently fallen, while labour taxes borne by companies have been more stable and now represent the largest component of the total tax obligations.

According to this study of tax regimes in 189 economies, including 13 from the region, Middle East continues to be the least demanding tax framework with United Arab Emirates, Qatar and Saudi Arabia retaining the top 3 positions in the overall tax ranking.

  • United Arab Emirates – 1st
  • Qatar – 2nd
  • Saudi Arabia – 3rd
  • Bahrain – 7th
  • Oman – 9th
  • Kuwait – 11th

The 2014 report finds that on an average a medium-sized company in the Middle East has a total tax obligation of 23.7%, making 17.6 payments and needing159 hours to comply with its tax requirements. The report also highlights a 9 year trend of all these indicators in the Middle East.

Commenting on the report Dean Kern, Partner, PwC’s Middle East Markets, Tax and Legal Services Leader said: “The Middle East tax environment is evolving. In desire to become simple and an efficient place to do business, the governments here are looking to strengthen their fiscal frameworks by introducing measures to reduce complexity, such as, electronic filing and e-payments. There is also a shift towards a more territorial approach to taxation along with an expansion of the tax treaty network in a number of regional economies such as UAE and Saudi Arabia. With GCC governments considering introducing VAT, the biggest challenge in order to drive voluntary compliance, will be to ensure that the VAT systems are simple, efficient and cost effective for companies.”

“Reforming the tax system is essential and this study shows that it is not just corporate income tax that is important. It is also a case of making decisions around who needs to be taxed, how they will be taxed, and by how much,” said Andrew Packman, leader for Tax Transparency and Total Tax Contribution at PwC.  “Trends in the international tax environment such as the globalisation of business, increasing competition among countries for tax revenues, and the increasing proportion of company assets that are made up of intangibles such as brand names, software and know-how, require tax systems around the world to be updated to meet modern needs.”

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Notes to the editor

About Paying Taxes

Paying Taxes 2014 measures all mandatory taxes and contributions that a medium-sized firm must pay in a given year. Taxes and contributions measured include the profit or corporate income tax, social contributions and labour taxes paid by the employer, property taxes, property transfer taxes, dividend tax, capital gains tax, financial transactions tax, waste collection taxes, vehicle and road taxes, and other small taxes or fees.

For more information about the Paying Taxes study, visit: www.pwc.com/payingtaxes.

The Paying Taxes annual report builds on the World Bank Group’s Doing Business reports’ chapter on Paying Taxes. For more information on the Doing Business report series, visit: www.doingbusiness.org

About PwC

PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 157countries with more than 184,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.

Established in the Middle East for 40 years, PwC has firms in Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, the Palestinian territories, Qatar, Saudi Arabia and the United Arab Emirates, with around 2,700 people. (www.pwc.com/middle-east)
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
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