Expat exodus likely if UAE rolls out taxes

Majority of expatriates will return home if the UAE introduces the proposed value added tax next year. This would inevitably lead to other levies like income tax.

Over 65 per cent of respondents of a survey conducted by arabianbusiness.com said they could leave the UAE if the tax burden is added to the skyrocketing cost of living.

The UAE could face a mass exodus of expatriates who were considering leaving the UAE as an option. ''Tax is on the way, and that's not part of the bargain I made when I came here,'' remarked the respondents.

Tax free regime of UAE has been an attraction for expats so far but high rents, traffic jams and mounting inflation have taken the sheen off the life in the country in recent years.

Only 20 per cent of respondents said they were not concerned about the consequences of the government introducing VAT, stating that as long as it was an improvement on the current customs duties it 'should be relatively painless.'

UAE inflation hit 9.3 per cent in 2006 and probably accelerated to 11.4 per cent last year, according to a recent poll of analysts.

Dubai Customs Executive Director Abdul Rahman Al-Saleh said last Thursday the UAE was expected to introduce VAT sometime next year, without being specific. All GCC countries will have value added tax within five years, he added.