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Explainer: Understanding UAE’s first-ever corporate tax

Taxes are increasing across the Gulf, and the UAE is seeking to boost tax compliance as well as cut down on money laundering.
UAE financial

Starting on Thursday, corporations and businesses in the United Arab Emirates will be subject to a new tax on corporate profits.

Background: The UAE announced its first-ever corporate tax in January of last year. There were previously no taxes on business profits, which made Dubai and Abu Dhabi attractive destinations for international companies. Instead, the UAE had relied on a value-added tax on most goods and services as well as business fees paid by companies.

An Emirati official told Al-Monitor last year that the UAE would reduce business fees in light of the new tax. In January, the UAE’s Ministry of Industry and Advanced Technology announced a reduction in government service fees. Abu Dhabi also reduced business fees in 2021.

The tax is coming as the UAE, like other Gulf states, is seeking to reduce its dependence on oil and gas.

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