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Tax on cars in the UAE suggested. Image: p.lange/Bigstock.

UAE can impose tax on cars to boost income: IMF

DUBAI, August 10, 2015

The International Monetary Fund (IMF) has suggested introduction of several new measures including a special excise duty on cars in the UAE to increase government revenue, according to a report.

It has also recommended implementation of a value-added tax (VAT) system and corporate income tax on all companies to diversify the government's revenues and strengthen its fiscal position, said a Gulf News report.

IMF said the UAE could generate extra revenues worth 4.1 per cent of the non-hydrocarbon domestic product (GDP) by introducing a 15 per cent ad valorem tax on passenger vehicles and broadening the coverage of its corporate income tax scheme, aside from collecting a 5 per cent VAT, the report quoted.

According to the IMF, the current tax structure does not raise enough money for the economy, thus additional revenue-generating reforms should be implemented. Collecting VAT alone will help the country raise extra income worth 2.7 per cent of non-hydrocarbon GDP, according to the IMF.

To avoid collecting general income tax from individual residents, the IMF said that widening the scope of the corporate income tax to include all foreign and domestic businesses operating in the country, except for those based in free zones, would be a great idea. The fee, however, should be reduced to 10 per cent from the current 20 per cent, it said.




Tags: Cars | tax | VAT |

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