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IMF urges Gulf states to harmonize tax regime to mitigate falling oil prices

Xinhua, February 24, 2016 Adjust font size:

The managing director of the International Monetary Fund (IMF) urged on Wednesday the Gulf Arab states to adopt a harmonized tax regime in order to mitigate losses from the dropping oil revenues.

The six member states of the Gulf Cooperation Council (GCC) have to face new reality that revenues from energy exports can no longer remain a major source of income "if they are priced out," Christine Lagarde told a joint press conference with the United Arab Emirates (UAE) Minister of State for Financial Affairs Obaid Humaid Al-Tayer.

The UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman, should "make sure that there is good communication and that they design and implement a system that avoids tax arbitrage and tax competition," he added.

Earlier in the week, the GCC states have agreed in principle on introducing value-added tax (VAT) of five percent by 2018 to partly compensate the slump in crude revenues.

Since the start of 2016, the price of the "black gold" has been fluctuating around 30 U.S. dollars per barrel (159 liters), down from over 100 dollars per barrel in June 2014.

The GCC states went through deficits in 2015, the first since the global financial crisis and the oil slump hit them in 2009.

In August 2015, the UAE Ministry of Energy decided to halt subsidizing fuel for all vehicles in the Gulf state. Endit