Dubai: The United Arab Emirates will impose a business tax beginning in mid-2023, according to the finance ministry, in a big shift as the government strives to diversify its income.
The Gulf financial hub, long renowned as a tax haven and regional headquarters for a slew of multinationals, will tax firm revenues exceeding 375,000 AED ($102,000) at 9.0 percent beginning in June next year, according to a statement.
The declaration is the latest big step by the UAE, which this year transitioned from Friday-Saturday weekends to Saturdays and Sundays in order to better match with global markets. The UAE has adopted a four-and-a-half-day work week, with Friday afternoon, Saturday, and Sunday being the new weekend. Monday through Thursday, it is 8 hours a day. On Fridays, there will be 4.5 hours of labor.
Monday through Thursday, the official working days and hours in ministries and federal institutions are 7.30 a.m. to 3.30 p.m.
In the public sector, the weekly break has been extended for two and a half days, from Saturday to Sunday, with Friday being half a working day.
“The UAE corporate tax regime will be amongst the most competitive in the world,” the official WAM news agency stated in a statement. The corporation tax rate of 9% is among the lowest in the world.
According to the government, there are no plans to implement a personal income tax or a capital gains tax on real estate or other investments.
The United Arab Emirates, a significant oil exporter as well as a key participant in commerce, trade, transportation, and tourism, is diversifying to minimize its dependency on petroleum.
It is also facing increased competition from neighboring Saudi Arabia, the world’s largest oil exporter, which is undertaking its own diversification and international business push.
“With the introduction of corporate tax, the UAE reaffirms its commitment to meeting international standards for tax transparency and preventing harmful tax practices,” said Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, in a statement.
Tax breaks in the UAE’s free-trade zones would be maintained, according to the statement.