UAE to announce tax starting from next year

The Treasury Department announced on Monday that the United Arab Emirates will introduce a federal corporate income tax for the first time from June 1, 2023, but is keeping the standard low to maintain its attractiveness for businesses.

In 2018, the UAE introduced a value-added tax on most goods and services at a standard rate of 5%.

The ministry says the new regime means a standard statutory tax rate of 9% and a 0% income tax rate of up to AED375,000 ($102,107.50) to support small businesses and start-ups.

The ministry said businesses in the UAE, the regional financial centre, are exempt from taxes on capital gains and share dividends. There are no plans to impose a personal income tax or capital gains tax on real estate or other investments.

The ministry said the UAE's corporate tax regime will continue to take into account the corporate tax relief offered to businesses that currently comply with all regulatory requirements in the free zone and do not conduct business in the UAE mainland.

The move comes as the oil producer continues to diversify its revenue sources from oil revenues. A major oil exporter and a major player in business, trade, transport, and tourism, the UAE is diversifying its activities to reduce its dependence on crude oil.

At the same time, it faces growing competition from neighboring Saudi Arabia, the world's largest oil exporter, as it continues to seek to diversify its economy and attract foreign business.