The corporate tax rates in some GCC countries are falling this year, at a time when elsewhere in the world, government's are demanding more from businesses.

'Many of the corporate tax trends seen elsewhere in the world are not necessarily applicable in the Gulf, where we are seeing tax rates continue to fall,' said KPMG's head of International Tax for the Middle East & South Asia Region Philip Marwood.

He said corporate tax for overseas companies was expected to fall from 35 per cent in Qatar to 10pc and in Kuwait from 55 per cent to 15 per cent.

'There are suggestions from some GCC countries of a broadening of the base of corporate taxpayers, perhaps to include local as well as non-GCC entities,' he said.

'However, the global lessons on indirect tax may be more relevant, as several GCC countries continue to ponder introducing value added tax (VAT) as a way of raising additional revenue.

'Certainly globally there is clear evidence of a major long-term change in the way that many governments are funded. For companies, it means that the management of taxes will become much more important.'

'In the past, many countries have used corporate taxes as a competitive tool to attract investment,' he added.

'But the urgent need for tax revenues to reinforce public budgets around the world, as a result of the global recession, has forced a subtle change in this policy, and many governments have acted to widen and strengthen their tax bases.'

Figures from KPMG's 2009 Corporate and Indirect Tax Rate Survey showed that the long-term slide in tax rates on company profits in Europe and Latin America came to a halt last year.

Although competitive pressures continue to drive corporate tax rates lower, any further cuts are likely to be paid for by wider restrictions on tax allowances and tighter enforcement.

In Latin America, the average corporate tax rate this year remained 26.9pc, the first time without a fall since 2004.

In Europe, average rates stayed at 23.2 per cent, the first time without a fall in 13 years.

Looking at indirect taxes, mainly VAT or goods and services tax, rates in Europe have risen from 19.5 per cent to 19.8 per cent and in Latin America 15.9 per cent to 16.2 per cent.-TradeArabia News Service