Corporate tax set to modernise UAE's economic ecosystem

The corporate tax will play a pivotal role in modernising the UAE’s economic ecosystem, supporting the UAE’s strategic objectives, ensuring tax transparency, and preventing harmful tax practices, experts say.

Addressing the second session of its corporate tax public awareness programme organised by the Ministry of Finance in Dubai, top government officials and private sector executives said the UAE corporate tax regime, with only nine per cent levy from June 1,2023, will be amongst the most competitive in the world.

They further said individuals will still not be subject to tax on their incomes from employment, real estate, equity investments or other personal income unrelated to a UAE trade or business. The tax also won’t be applied to foreign investors who don’t conduct business in the country.

Younis Haji Al Khouri, Undersecretary of the Ministry of Finance, who delivered the keynote address, said the Ministry of Finance designed the corporate tax law based on international best practices to expand its role in strengthening the UAE’s economic ecosystem.

“The law helps accomplish the UAE’s strategic objectives and provides additional revenue streams for the federal government to implement ambitious projects and maintain sustainable economic growth,” he said.

Khalid Ali Al Bustani, director-general of the FTA; Mohammad Ali Rashed Lootah, president and CEO of Dubai Chambers; leading officials and representatives from various business sectors along with more than 600 tax experts and business owners also attended the event.

Broadening revenue base

The corporate tax on business profits above Dh375,000 ($102,110) will help diversify government revenue away from the oil sector and broaden the government’s revenue base. It will further align the UAE with international efforts to combat tax avoidance, as the tax will be applied to all business and commercial activities except the hydrocarbon sector, which will remain subject to emirate level taxation.

“Today is an opportunity to explore the key features of the corporate tax regime and to provide business sectors with pertinent information and a thorough explanation of the aspects of the law,” Al Khouri said.

He said the aim is to support correct and accurate understanding and ensure seamless implementation and compliance with the new regime.

“This, in turn, helps support Dubai’s growing business community and facilitate more growth and prosperity in the private sector, as the emirate moves forward with implementing its ambitious strategic plans and building a world-class model to support the business community and achieve sustainable economic growth,” he said.

Empowering private sector

Khalid Ali Al Bustani said the launch of corporate tax in the UAE marks a new phase in empowering the private sector and the national economy, which serves to advance the country’s position as a global business and financial hub.

“The UAE's corporate tax regime keeps pace with tax systems implemented in other jurisdictions and countries that have established cooperation ties with the UAE, collaborating on ambitious commercial projects and investments. This facilitates the flow of capital and investment in Dubai and the UAE, on one hand, and in countries all around the world, on the other,” he said.

“We are confident that the business community in Dubai and across the country will show full compliance, and we commit to supporting them all the way to ensure the success of the entire tax ecosystem,” he said.

Tax experts and participants at the awareness programme said the new tax regime allows a generous compliance period to implement the new levies in the country. Referring to corporate tax, they said businesses with a financial year starting on June 1, 2023, and ending on May 31, 2024, will have until February 28, 2025, to file their tax returns and make payments.

— muzaffarrizvi@khaleejtimes.com