VAT!! NOT!!

According to the newspapers, UAE is considering implementing a VAT based direct taxation system in United Arab Emirates and rest of the GCC countries. Implementations of direct tax have been in the rumors time and again for the last decade. No direct taxes have been implemented ever in dubai/UAE in their history.

So, should they go ahead now? IMF wants it. GCC as a whole should be under somekind of taxation should they go ahead with the plan to unify the economices and have a common currency (Also in the news nowadays). I am not sure if taxation should be the first common link in economies of GCC countries, but some kind of regulatory authority over all the countries financial systems would be a good starting point. Taxing some percentage without any central authority to regulate and manage it would be futile.

Individual countries of the EU have all the institutions in place for decades, they know the freedoms and responsiblities. Still EU economy is a mess, with all regulatory rules broken time and again. Example is germany's budget deficit. Without Individual countries of the GCC implementing their own instituational history and having their own populations follow it, there is little or no point on implementing any cross-border mass regulatory bodies such as taxation board.

I would support some kind (or any kind ) of regulation which has control over financial sector of all the businesses in united arab emirates. (Not single institutions like DIFC or free zones) This country has some of the lowest Returns of Cost of Ownership and Return on Capital. As somebody commented on their blog, dubai is building sand castles. Building is easier than maintaining it. Without good financial control and regulatory command, you will never know how well your country and your firm is doing.

Lastly, there is no point in doing something, just because your neighbor did it.