Tax reforms imminent in 2011: E&Y

The Middle Eastern and North African (Mena) governments have implemented new tax regimes and expanded their commercial laws relating to inward investment and more such reforms are imminent in 2011, according to consultancy Ernst & Young.

“The region has witnessed a series of tax reforms in the last two years and more are expected in 2011,” said Sherif El-Kilany, Mena Tax Leader, E&Y, while commenting on the challenges and opportunities arising out of evolving tax landscape in the Mena region.

The challenges were deliberated at E&Y’s Mena Tax conference under the theme ‘Challenges and Opportunities: The evolving tax landscape in the MENA region.’

“Changes in the regulatory environment have forced businesses to plan their tax strategies in advance to mitigate risk resulting from fiscal changes. In addition to tax reform, there is a significant increase in the number and size of investments being made into the region,” El-Kilany said.

Mena countries have demonstrated a sense of renewed interest in encouraging and promoting inward investments, an E&Y statement said. Countries in the region have instituted investment incentives like relaxation of restrictions on foreign investment, tax incentives for R&D expenditures, special tax breaks for SMEs etc, it added.

Further, most countries focused their efforts in promoting foreign investments in sectors such as energy, health, education, manufacturing and value added industrial investments etc. Also, some of the most prominent fiscal changes were seen in the tax regimes of Iraq, Kuwait, Qatar, Saudi Arabia and Oman.

The Mena tax conference explored recent changes in the fiscal environment within the region, tax treaties, regional expansion and evolving business and regulatory practices.

Sherif added: “As both local and multinational companies expand their geographic horizons, they are exposed to a new array of cross-border tax and regulatory issues and opportunities. It is critical for companies to understand the importance of tax optimisation when evaluating acquisitions and operational-related costs.”

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