Middle East tax advisory market to outpace North America and Europe growth amid new Gulf taxes

Regional market projected to grow by 13 per cent to $758 million this year

The UAE introduced corporate tax last year. Pawan Singh / The National

The tax advisory market in the Middle East is expected to grow four times faster than in North America and Europe this year as the Gulf economies introduce new taxes to broaden their revenue base and diversify their incomes.

The overall size of the tax advisory market in the broader Middle East is projected to grow by 13 per cent to $758 million this year, while in North America and Europe, it is forecast to expand by 3 per cent, according to a new report from Source Global Research. However, the size of the latter markets, at $33.96 billion and $14.75 billion respectively, far exceed those of the Middle East.

In 2025, the tax advisory market in the Middle East is forecast to grow by 11 per cent to $840 million, while in North America and Europe by 5 per cent and 7 per cent to reach $35.8 billion and $15.7 billion, respectively.

Economies across the six-member economic bloc of the Gulf Co-operation Council are overhauling their revenue bases and adding new sources of income through the introduction of taxes as part of their broader economic overhaul agenda. The UAE, the second-biggest Arab economy, introduced corporate tax last year, while Oman is considering the introduction of personal income tax on high earners in the sultanate.

In July, Oman's Shura Council revealed plans to forward a draft law on personal income tax to the State Council. Although the exact details are still being finalised, if passed, the sultanate’s personal income tax would be a first in the Gulf, with citizens taxed on net global income above $1 million and foreign residents on Oman-sourced income above $100,000.

Bahrain also plans to introduce a new tax on multinational corporations operating in the country starting from January, as part of plans to align with global taxation reforms.

“In addition to strong growth in the Middle East, we expect to see a bounce back in tax advisory growth across all regions in 2025,” Tony Maroulis, principal consultant at Source Global Research, said.

“The plethora of crises that have manifested in the last few years have been challenging for companies, but we expect investment to return by 2025, with tax advisory services experiencing growth of around 6 per cent.”

In 2024, the overall tax advisory market globally is forecast to grow by 4 per cent to reach around $57.8 billion, according to the report. International and indirect taxes are projected to be the fastest-growing services, at 5 per cent and 7 per cent respectively as a result of the “increasingly complicated international tax regulations, as well as the introduction of new global regulations such as Pillar Two, to come into force in 2025”, the report said.

The Organisation for Economic Co-operation and Developments Pillar Two reform programme stipulates that multinational enterprises pay a minimum 15 per cent tax on profits in each country where they operate.

Companies from financial services accounted for nearly half – $27 billion – of the total tax advisory market, worth $56 billion in 2023. That "is not set to change significantly", according to the report. Manufacturing accounted for 2.2 per cent of the total tax advisory market at $6.1 billion, while the share of the services sector was 3.4 per cent at $5.4 billion, the data shows.

The report also said environmental taxes will impact 97 per cent of companies globally within three years as public and investor pressure grows for companies to follow environmental, social, and governance initiatives. Environmental taxes already affect around a sixth of companies surveyed, while the majority expect to deal with them in the next year, and a further quarter within the next three years.