Overview
In landmark legislation published on 9 December 2022, the United Arab Emirates (UAE) introduced its corporate tax regime. This was in light of a general move towards a global minimum tax rate. It aims to do so while remaining attractive to businesses establishing and expanding in the Emirates.
The introduction of the corporate tax regime will provide a basis for the UAE to execute its support of the OECD Pillar Two international tax reform framework, which it signed along with 129 other countries in 2021.
The International Monetary Fund (IMF) in 2001 urged Gulf states to introduce taxes to diversify revenue streams and expand non-oil revenues. More recently, the IMF advised Gulf countries to maintain reform momentum despite oil boom drawing lessons from the past.
“Looking to the medium term, we welcome the planned fiscal reforms, including the expected introduction of a corporate income tax and gradual phasing out of business fee structures” – Mr Ali Al-Eyd of the IMF, speaking following his Article IV Consultation with UAE authorities, held from 2 to 17 November 2022 in Abu Dhabi.