Tax: enough chat, get on with it.

More mutterings about tax in the Gulf, this time from Bahrain. Khalifa Al Dhahrani, speaker of the Bahrain Parliament called for levying taxes on profits of foreign commercial institutions. As usual in these things he did not specify the tax rate or suggest a date for applying the new regime.

"Bahrain has limited sources of income and relies heavily on oil to fund its spending. Now it needs to diversify its sources, expand its financial assets and preserve the rights of the future generations," says Al Dhahrani, reported in Gulf News. "It is only fair that foreign investors should contribute to the expenses by paying taxes."

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Beyond tax-free

The UAE has one of the world's most attractive personal tax environments according to a new global survey of expatriate hot spots by Mercer. I don't know how long it took Mercer to compile the report (it canvassed 32 countries) but the UAE section should have easy enough: note for next year, guys, there is no direct taxation here.

At first glance the report, Mercer's Worldwide Individual Tax Comparator, makes bland enough reading. The UAE is top, what more do we need to know. It is cost-of-living and competitiveness reports that we're most interested in. How or how much expat workers can get for their dirham overseas. Or what it costs to rent a two-bed apartment in downtown Moscow, Bangkok or Cape Town.

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Poor public spending is a worse crime than direct taxation

Drip by drip the subject of direct taxation on income is being raised by Gulf states. Kuwait is the latest to crack. Its ruler used a local Arabic newspaper last week to point out the high cost of public services will eventually be met by a tax on personal income. Bahrain started a 1 per cent levy in June, the funds going directly to tackle unemployment.

Income tax, said Emir Sheikh Sabah Al-Ahmad Al-Jaber Al Sabah, was not a new concept concept and that it was the state’s right in return for services “but is also a contribution from the citizen to state development”. Oil is running out, the welfare burden is too great and diversifying the economy costs money. Direct taxation is a must, say economists.

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