Special Features
UAE Among Economies Easiest In Tax Payment
Taxes are essential. In most economies, the tax system is the primary source of funding for a wide range of social and economic programmes. How much revenue these economies need to raise through taxes will depend on several factors, including the government’s capacity to raise revenue in other ways, such as rents on natural resources. Besides paying for public goods and services, taxes also provide a means of redistributing income, including to children, the aged and the unemployed.Nevertheless, the level of tax rates needs to be carefully chosen. Recent firm surveys in 123 economies show that companies consider tax rates to be among the top four constraints to their business.
The economic and financial crisis has caused fiscal constraints for many economies, yet many are still choosing to lower tax rates on businesses. Seventeen reduced profit tax rates in 2009/10. Canada, Germany and Singapore implemented tax cuts in 2009 to help businesses cope with economic slowdown.
Doing Business addresses these concerns with three indicators: payments, time and the Total Tax Rate (TTR) borne by a standard firm with 60 employees in a given year. The number of payments indicator measures the frequency with which the company has to file and pay different types of taxes and contributions, adjusted for the way in which those payments are made. The time indicator captures the number of hours it takes to prepare, file and pay three major types of taxes: profit taxes, consumption taxes, labour taxes, and mandatory contributions.
The top ten economies on the ease of paying taxes represent a range of revenue models, each with different implications for the tax burden of a domestic medium-size business. The top ten include several economies that are small or resource rich.
Easiest Rank
1. Maldives
2. Qatar
3. Hong Kong SAR, China
4. Singapore
5. United Arab Emirates
6. Saudi Arabia
7. Ireland
8. Oman
9. Kuwait
10. Canada
Note: Rankings are the average of the economy’s rankings on the number of payments, time and Total Tax Rate.
Source: Doing Business database.
