The UAE has been rated as the best tax-free system in the world and the
least corrupt society in the whole Arab region.In its Economic Freedom
Index for 2008, the United States Heritage Foundation gave the UAE 99.9
points in its Fiscal Freedom category within its overall index.
It also rated the Emirates as the least corrupt society in the
Arab world, granting it 62 points in its Freedom from Corruption
category.
Although the UAE got a medium rating in the overall
index, ranked 63rd among the 162 countries covered by the index, it was
on top of the list in some of the 10 sub categories included in the
Index, which was created by the Washington-based Heritage Foundation
and the Wall Street Journal in 1995.
Only Kuwait was on a par
with the UAE in fiscal freedom as it got an equivalent rating, while
Qatar received 99.8 points. The index gave 99.7 points each to Saudi
Arabia and Bahrain and 98.5 points to Oman.
Other Arab
countries received lower points as many of them impose heavy taxes
given their relatively low oil resources.They included 65.4 points for
Morocco, 83.2 points for Yemen, 74.8 points for Jordan and 77.0 points
for Algeria and 86.2 points for Syria.
Egypt and Lebanon
received relatively high points as they have cut taxes within financial
liberalisation and economic reforms aimed at attracting
investment.Lebanon received 91.4 points and Egypt 90.8 points, while
Libya got 81.7 points although it is an oil producer.
In its definition of the Fiscal Freedom category, Heritage said
it is a "measure of the burden of government from the revenue side".
"It
includes both the tax burden in terms of the top tax rate on income
[individual and corporate separately] and the overall amount of tax
revenue as a portion of gross domestic product (GDP)," it said.
The
UAE does not have income or corporate taxes but imposes indirect token
taxes, including fees on government services, on firms and
individuals.Economists see no change in such a policy on the ground
that the UAE is enjoying massive fiscal surpluses because of high oil
prices.
"Even during the height of the oil price crisis in late
1980s and 1990s, the UAE ruled out the imposition of income taxes
although it was suffering from persistent budget deficits," an
economist at an Abu Dhabi-based bank said.
"I do not think the
UAE now needs to impose taxes when oil prices are nearly $100 and the
country controls one of the largest foreign assets in the world."
Qatar,
which has the highest per capita income in the region, received 60
points by Heritage in the least corrupt society in the Arab world
category, while 57 points were given to Bahrain and 54 points to Oman.
Kuwait
got only 48 points, while Saudi Arabia was rated as having a relatively
corrupt system, with only 33 points.The UAE also got a good rating in
the Trade Freedom category, obtaining 80.4 points, third only to Kuwait
and Bahrain in the Arab region.
It also had one of the best
monetary and labour systems but lagged behind in such categories as
investment and property freedom.
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