Effects of No Income Tax Policy on Dubai's Economy Essay

Effects of No Income Tax Policy on Dubais providence - Essay ExampleDubai has changed dramatically over the utmost(a) three decades, becoming a major business center with a more dynamic and change economy. Dubai enjoys a strategic location and serves as the biggest re-exporting center in the Middle East. The city now has thriving manufacturing, finance, information technology, big choice of Dubai property and touristry sectors and is home to numerous multinational companies such as AT&T, General Motors, Heinz, IBM, Shell, and Sony.1 In Dubai there are no personal assesses former(a) than mo duties (mostly at rates up to 10%), a 5% residential tax assessed on rental value, and a 5% tax on hotel function and entertainment.1 Being an oil-rich country, the government is not dependent on direct taxation as a source of its revenue and thus, there is no income tax. This curls not just petty businessmen but multinationals too to invest in trading opportunities in the country. It has been noted that while tourism has grown exponentially in the last ten yeas, people are also looking forward to investing in property in Dubai. Since investing anywhere else in the world would clear taxes from the government both direct and indirect, both during purchase and sale of land foreign nationals, especially western Europeans are attracted to Dubai as an investment center. The government has do huge investments in hotels, leisure and recreational facilities to attract a large number of tourists, who might later be interested in buying property. This would attract people not only for business but also for buying property and migrating to Dubai.For an economy that was primarily dependent on its oil reserves, this would be a boon. With more and more investment in both people and land by foreign companies and high net worth psyches, the economy is all jell to grow. Manufacturing industries have been set up in sectors like beverages, chemicals, paper, pharmaceuticals and rubb er. As the diversity of the population grows, so would the needs and a necessity to increase economic activity. Thus, the no income tax policy followed by the Dubai government has benefited the economy immensely.Can other gulf states emulate this policy Is it feasible Yes or NoOther gulf states can emulate this policy to a certain extent. While most countries like Oman and Saudi Arabia are already following a No Income tax policy, there are certain restrictions on investment in property by foreign nationals. Not all governments might be as vindicated to change as the government in Dubai. There could be a small fear lurking in the minds of the authorities of being overpowered or misused by vested interests. Investment in land by a foreign national is allowed only in partnership with a local company or individual in some gulf countries. This might have been followed to safeguard the interests of the local population. Free capital movements raise concerns about theloss of national so vereignty and other possible adverse consequences. Foreign directinvestment (FDI) even more so than other types of capital flows has historically givenrise to such concerns, since it whitethorn involve a controlling stake by multinational corporations over which domestic authorities, it is feared, have little power.2 Islamic law goes into great head about family, inheritance, foundations, property rights and obligations, and public law operates along with rules of usage