Dubai 'plans 200pc tobacco tax'
Dubai, April 19, 2012
Dubai plans to double the levy it charges on tobacco to 200 per cent by August, Khaleej Times reported on Thursday, citing the head of the emirate's health authority.
"We will impose the tax on tobacco by August in co-operation with the Dubai Municipality," said Qadhi Al-Murooshid, director general of the Dubai Health Authority according to the paper.
He was speaking on the sidelines of a cardiology conference in Dubai.
The authorities, which hope the measure will deter smokers and reduce expenses on treating cardiovascular diseases, currently levy a 100 percent tax on tobacco products. Branded cigarettes are available from 7 dirhams ($1.91).
The current tax accounts for around one percent of Dubai's annual income, set at 30.4 billion dirhams for 2012. The government budget relies on various fees, taxes and customs for about 85 percent of total revenue.
A government official told Reuters the new rate would have to be imposed across all seven emirates if it decided to do so to prevent pricing differences. The federal finance ministry officials were not immediately reachable for comment.
The UAE, one of the world's top five oil exporters, has been looking at options how to diversify budget revenue possibly through introduction of a uniform corporate tax and value added tax to reduce dependence on volatile oil income. Officials have said no new taxes were planned over the next two years.
At present, the UAE's fragmented tax system is obscured by different charges and levies introduced by individual emirates, which run their own independent government budgets. Individuals do not pay income tax.
Dubai, which lacks oil wealth of neighbouring Abu Dhabi, has used a low-tax profile and tax-free zones to attract firms and cement its position as the Gulf trade and financial hub. - Reuters