Within the span of month the UAE took two bold steps with the aim to develop a proper legislative and legal structure for the post-oil period. The first was to launch the Bankruptcy Law and the other was founding a Federal Tax Authority (FTA). The Bankruptcy Law will help stimulate investments while the FTA will have importance with regard to regulating public finance.
Days before issuing the FTA’s founding decree, the International Monetary Fund (IMF) made a statement praising the UAE for efforts made to develop financial performance indicators. It is a fact that the tax regime represents the main source of income for state budgets. These will not be complete without this element — economies in Europe and North America would certainly face multiple difficulties without resorting to taxes.
These countries have a long history of developing its tax system. Some of these trace their origins to more than 200 years and have witnessed a lot of changes according to the economic conditions prevailing at any given time.
Tax regimes are defined as an effective financial measure that controls and harnesses many aspects to serve developmental needs, control economic conditions and surmount numerous complications that may arise in the interim.