Accounting, Finance, and Taxation in the Gulf Countries Accounting, Finance, and Taxation in the Gulf Countries Wagdy M. Abdallah palgrave macmillan ACCOUNTING, FINANCE, AND TAXATION IN THE GULF COUNTRIES Copyright © Wagdy M. Abdallah, 2008. Softcover reprint of the hardcover 1st edition 2008 978-1-4039-7798-4 All rights reserved. First published in 2008 by PALGRAVE MACMILLAN® in the US—a division of St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-73829-8 ISBN 978-0-230-61454-3 (eBook) DOI 10.1057/9780230614543 Library of Congress Cataloging-in-Publication Data Accounting, finance, and taxation in the Gulf countries / edited by Wagdy M. Abdallah. p. cm. Includes index. 1. Accounting—Persian Gulf Region. 2. Finance—Persian Gulf Region. 3. Taxation—Persian Gulf Region. I. Abdallah, Wagdy M. (Wagdy Moustafa) HF5616.P35A33 2008 658.15(cid:2)9909536—dc22 2008002504 A catalogue record of the book is available from the British Library. Design by Newgen Imaging Systems (P) Ltd., Chennai, India. First edition: September 2008 10 9 8 7 6 5 4 3 2 1 Transferred to Digital Printing in 2013 To my wife for her love, support, and understanding, and to the memory and souls of my parents Contents List of Tables and Figures ix Contributors xi 1. Introduction 1 Wagdy M. Abdallah Part I Environmental Factors Affecting Investment and Management of National and Multinational Companies in the Gulf Countries 2. The Economic and Political Factors and Their Impact on Accounting and Management in the Gulf Countries 27 Wagdy M. Abdallah 3. Islamic Business Ethics and Its Impact on Accounting, Tax, and Finance 49 Athar Murtuza Part II Accounting and Auditing of the Gulf Countries 4. Accounting Standards and Practices of the Gulf Countries 75 Wagdy M. Abdallah 5. International Financial Reporting Standards and Their Relevance to the Gulf Countries 95 Wagdy M. Abdallah 6. Evolution and Practices of the Auditing Profession in the Gulf Countries 119 Mohamed E. Ibrahim viii CONTENTS 7. Accounting Profession and Accounting Education in the Gulf Countries 131 Sivakumar Velayutham and Sabri Al-Segini Part III Corporate Governance, Tax Regulations, Stock Markets, and Financial Institutions in the Gulf Countries 8. Corporate Governance System in the Gulf Countries 155 Wagdy M. Abdallah 9. Tax Rules and Regulations of the Gulf Countries 173 Wagdy M. Abdallah 10. The Development of Securities Regulations in the Gulf Countries 217 Sivakumar Velayutham and Thoraya Al-Hajj Part IV Looking Ahead 11. The Future Outlook of the Business Trends in the Gulf Countries and Its Impact on the Developments in Accounting, Finance, and Tax 241 Wagdy M. Abdallah Index 255 List of Tables and Figures Tables 2.1 Gulf countries and the U.S. reserves by country as of January 1, 2006 (billions barrels) 30 4.1 The Saudi accounting standards 81 4.2 Local accounting differences compared with IAS/IFRS and GCCAAO 83 5.1 A list of revised IAS 101 5.2 A list of recently issued IFRS 103 5.3 Use of IFRS for reporting by domestic listed and unlisted companies in the Gulf countries 112 7.1 Professional setting in Bahrain, Kuwait, and Saudi Arabia 138 7.2 Professional setting in Sultanate of Oman and the United Arab Emirates 141 7.3 Major national government funded universities in GCC countries 145 9.1 Income tax rates of Kuwait 183 9.2 Corporate income tax rates of Kuwait 183 9.3 Personal income tax rates of Kuwait 185 9.4 Income tax rates of Oman 191 9.5 Income tax rates on branches of foreign companies in Oman 192 9.6 Corporate income tax rates of Qatar 197 9.7 Income tax rates of Saudi Arabia 203 9.8 Corporate income tax rates of Saudi Arabia 203 9.9 Corporate income tax rates of Abu Dhabi-UAE 210 9.10 Gulf countries taxation at a glance 214 10.1 Arab Monetary Fund Index for GCC stock markets 224 10.2 Annual growth rates of gross domestic product of the GCC countries 230