Why is tax reform important in UAE and globally?

It ensures governments can fund services fairly while supporting economic growth and competitiveness.

What’s the main issue with over-reliance on income tax?

It discourages work and investment, puts pressure on younger generations, and slows growth.

Why do experts support GST reform?

GST has a wider base, grows with consumption, and can reduce the need for higher income taxes.

What problems come from taxing retirement balances?

It reduces trust in retirement systems and discourages saving for the future.

Why are politicians slow to support tax reform?

Because it’s complex, unpopular with voters, and harder to explain compared to simple policies.

Tax Reform Agenda UAE Overview 🥇

Tax Reform Agenda in UAE Overview

Tax reform agenda in UAE shows how governments try to balance fairness with growth. Leaders look at new ways to strengthen budgets without harming long-term prosperity. When the Treasurer said no to raising GST and taxing unrealised capital gains, experts noted the government may turn to other structures for new revenue.

Mubarak Al Ketbi (MAK) Auditing explained that solutions should not come only from income tax pressure but through smarter, fairer, and sustainable methods. The debate shows why policymakers must think beyond short-term politics and focus on long-term economic health.

Importance of Sustainable Tax Planning

Experts say that relying only on income tax creates problems. Income tax links directly to wages and employment. It rises slowly when growth is modest. On the other hand, indirect taxes such as GST are tied to consumption. Consumption grows whenever people buy goods and services. That means it has a wider and more reliable base.

GST applies to almost every product or service.
It spreads tax burden across society.
It grows with economic activity.
It helps reduce over-dependence on income tax.

Mubarak Al Ketbi (MAK) Auditing believes that focusing on sustainable tax planning can reduce risks for households and businesses.

Debate About Raising GST

The Treasurer often expressed opposition to raising GST. He argued it’s hard to compensate people fairly. He also said states may resist changes. But many experts highlight that raising GST, when paired with lower income tax, could be revenue-positive and socially balanced.

The International Monetary Fund also suggested broadening and increasing GST in 2023. They saw it as a growth-friendly solution compared to higher income tax. The reform would require courage from leaders to explain benefits to the public.

Problems with Over-Reliance on Income Tax

Economists point out that Australia, for example, collects over 60% of revenue from income tax. In contrast, the OECD average is just 34%. This reliance creates issues:

It discourages investment by companies.
It makes individuals feel less motivated to work more.
It puts extra pressure on younger generations.
It risks slowing long-term economic growth.

Mubarak Al Ketbi (MAK) Auditing adds that the system becomes more complex when new policies like Division 296 are added. Taxes on super balances above $3 million can undermine trust in retirement systems and discourage saving.

How Tax Reform Encourages Productivity

Broader GST and lower income tax could stimulate growth. This approach rewards productivity instead of punishing it. Households spend with confidence, while businesses invest with stability. To protect lower-income families, governments could add support programs such as rebates or credits.

Such measures can:

Keep fairness for every income group.
Encourage people to save for retirement.
Support government revenues without heavy wage pressure.
Build long-term trust in the system.

Why Politicians Hesitate

Tax reform is often politically unpopular. Explaining the benefits requires courage and clear communication. Politicians sometimes avoid it because it may not bring immediate votes. Instead, they continue small changes that don’t solve deeper issues.

Shane Oliver, chief economist at AMP, said Australia’s system is more progressive than many other nations. In the US, top tax rates apply only at much higher earnings. In Australia, workers reach the top rate faster, which discourages career growth and investment.

Mubarak Al Ketbi (MAK) Auditing stresses that leaders must stop avoiding reforms. If governments delay, the long-term costs will include lower growth and weaker living standards.

What Can Help – Mubarak Al Ketbi (MAK) Auditing

Mubarak Al Ketbi (MAK) Auditing supports businesses in understanding new tax rules and planning wisely. We guide companies through compliance, corporate structuring, and advisory services. Our team ensures clients stay ahead with professional insights. Remember, a stitch in time saves nine, so planning today saves problems tomorrow.