UAE dilutes tax-free status with new corporate profit levy
BNN Bloomberg
The United Arab Emirates plans to introduce a federal tax on corporate earnings for the first time next year, in its latest step toward dismantling a levy-free regime that helped make it a magnet for businesses from across the world.
The United Arab Emirates plans to introduce a federal tax on corporate earnings for the first time next year, in its latest step toward dismantling a levy-free regime that helped make it a magnet for businesses from across the world.
The government’s set to introduce a 9 per cent federal corporate tax on business profits from June 2023, state-run WAM news agency said Monday. Corporate tax won’t apply on personal income from employment, real estate and other investments, and incentives for free-zone companies that don’t do business with the mainland will continue.
“Introducing a CT regime reaffirms the UAE’s commitment to meeting international standards for tax transparency and preventing harmful tax practices,” the UAE ministry of finance said on its website.
The move comes despite rising competition from neighboring Saudi Arabia, which has been offering new incentives to encourage international firms to shift their Middle East headquarters to the kingdom.
Amid a gradual introduction of taxes that’s made the UAE a more expensive place to live than it once was, the government took several significant steps during the pandemic to encourage the foreigners who make up most of its population to stay for the long haul. In 2020, the government abolished the need for companies to have Emirati shareholders -- a major shake-up of foreign-ownership laws -- and last year it unveiled plans to offer citizenship to a select group of foreigners.
This month, the UAE switched to a Saturday-Sunday weekend to synchronize better with the global economy. It wasn’t immediately clear how the latest measures fit into that broader trend or whether they might prompt some companies to relocate to Saudi Arabia or elsewhere.
