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The Advantages of The Taxation Regimes in The Middle East

So, if you want to operate in the Middle East, setting up a business in Qatar can prove to be quite advantageous

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Taxation, Regimes, Middle East
Most Middle Eastern countries offer a low-tax regime, while others, such as Qatar, impose no corporate or personal income taxes. Pixabay

The Middle East, which until recently was sought mostly by investors in the oil and gas field, has become a very attractive destination for entrepreneurs seeking to operate in other industries as well and one of the most appealing aspects of starting a business here is the taxation system.

Most Middle Eastern countries offer a low-tax regime, while others, such as Qatar, impose no corporate or personal income taxes. So, if you want to operate in the Middle East, setting up a business in Qatar can prove to be quite advantageous.

Below, you can read about other advantages offered by Middle Eastern countries in terms of taxation.

Middle Eastern countries allow for free repatriation of profits

Taxation, Regimes, Middle East
The Middle East, which until recently was sought mostly by investors in the oil and gas field, has become a very attractive destination for entrepreneurs. Pixabay

Most countries in the Middle East provide for the free repatriation of profits earned by companies operating here. This is also the case of the UAE in which foreign investors can set up various types of companies. For example, starting a business in Dubai can mean free repatriation of profits if the owners are foreigners.

Most countries do not impose employment-related taxes

One of the struggles of business owners is to pay various employment-related taxes, contributions and insurances. This is not the case of many countries in the Middle East where there are no such taxes or where employment is taxed at very low rates. When combined with a cheaper workforce compared to European countries, states here will definitely become more attractive to investors from all over the world.

Wide networks of double tax treaties

Also Read- The Main Benefits of Opening a Company in A Foreign Country

Even if they impose a few or no taxes, many Middle Eastern states have signed double taxation agreements in order to help foreign business owners reduce the tax burden in their home countries. Also, when considering that these agreements follow the Organization for Economic Co-operation and Development models on the disclosure of financial information, these countries become more appealing for those interested in onshore destinations with low corporate taxes.

Low VAT taxes

One of the recently introduced taxes by countries in the Gulf Cooperation Council is the value added tax. However, this tax is imposed at very low rates and many investors with companies here have obtained the support of governments in implementing the new regulations which provides for how quickly Middle Eastern countries can adapt to changes.

The Middle East is one of the most appealing parts of the world when it comes to taxation, however, it offers many other benefits apart from this aspect. The cheap workforce, the modern legislation and economic stability are also some of the reasons why foreign investors choose countries here for setting up businesses. 

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Foreign Portfolio Investors Suggests Tax Stability For Improved Investments

Tax stability must, to invest in the Indian market: FPIs to FM

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tax stability
Finance ministry called a meeting with FPIs and domestic institutional investors on Friday. Pixabay

The government gave a patient hearing to the suggestions coming from foreign portfolio investors (FPIs) on the new tax proposed in the Budget but is yet to take a call on either revoking or minimising the impact of the new surcharge that has already seen investors taking out over Rs 22,000 crore since July 5.

The finance ministry had called a meeting with FPIs and domestic institutional investors on Friday to hear their concerns about some of the recent changes in taxation for overseas investors. Representatives of the FPIs met the Finance Minister and secretaries in North Block.

Participants comprising all major foreign institutions investors were, however, left high and dry with finance ministry officials giving no comments on their suggestions but heard everyone on each point they raised.

There was speculation that the government might come with some decision on Friday itself as a confidence-building measure. Reports of tax withdrawal have already pushed up the Sensex by over 900 points in the two-day session.

In the meeting, FPIs sought tax stability from the Finance Minister to be able to invest and stay invested in India while seeking rollback of the tax surcharge on them.

tax stability
FPIs sought tax stability from the Finance Minister to be able to invest and stay invested in India. Pixabay

Nandita Parkar, President, AMRI (Association of Asset Management Roundtable of India) an association of FPIs, said “We talked about taxation, ease of doing business. We told them that India can attract 25-35 billion-dollar investment just in equity FPI flows and in order to do that to let that happen one of the conditions is a stable tax regime which is very important so that the tax does not act as a hurdle and tax needs to be predictable for investment. So that was a big issue which we discussed.”

She said quick fixes are needed for the revival of stock in India. “We made a presentation to the five secretaries and the finance minister. I feel our suggestions were listened to very very carefully.”

Asked if she hopes the government will roll back the FPI tax, she said: “I am just hoping”. She told IANS that if the FPI tax is allowed to continue it would do a lot of damage to the investments in India by the FPIs.

tax stability
The meeting comes in the wake of growing concerns among FPIs over the increased tax surcharge on trusts and association of persons. Pixabay

The FPI association chief also said “Apart from tax surcharge and LTCG issues, we also brought forth ease of investing in India. We told them there is a need for a stable tax regime for the next five years. The fear of prosecution is holding back investors,” Parker stressed.

Also Read: Economic Development Always Comes with Dash of Urbanization

All participants said the government had no comment to make after the suggestions which they keenly heard but all the FPIs were unanimous in saying the fact that they were calling even after the Budget has been passed itself was a positive reaction from their side. But what happens next depends on the government.

The government had increased the tax surcharge on all the non-corporate entities which earn over Rs two crore in income annually. About 40 per cent of the FPIs would be impacted by this tax hike. (IANS)