Written by Hamzah Abu Zannad, Co-Founder of Axiom Prime Development on the country’s corporate tax move
In the realm of market analysis and real estate, my role often involves navigating through new market dynamics, where discussions frequently gravitate towards the UAE’s implementation of a 9% corporate tax and its impact on the business ecosystem.
Contrary to the apprehension that this tax might deter companies from establishing their presence in the UAE or compel existing entities to cease operations, I perceive this strategy as exceptionally astute, as this method does not merely siphon money from businesses but strategically redirects taxes that would have otherwise benefited the companies’ home nations. This approach signifies an ingenious mechanism for the UAE to broaden its revenue streams beyond oil dependency.
To orchestrate such a pivotal manoeuvre required extensive groundwork and strategic planning. The UAE has forged an impressive 193 Double Tax Agreements (DTAs) network across most global tax jurisdictions. These treaties highlight the UAE’s proactive measures to shield companies from dual taxation on the same income. By retaining a portion of these taxes, the UAE cultivates an attractive economic landscape for international businesses and investment, marking a strategic shift towards augmenting the nation’s non-oil revenue sources and cementing its status as a leading hub for business and investment.
The corporate tax, levied on business profits exceeding AED 375,000, is competitive relative to other nations, enhancing the UAE’s allure as a preferred destination for global enterprises. The tax framework thoughtfully exempts personal income, real estate investments, and other non-business income, thereby lightening the compliance load for companies.
Up to this point, the UAE has successfully established 193 DTAs and Bilateral Investment Treaties (BITs), tackling both direct and indirect corporate taxes to mitigate or abolish corporate taxes on investments and profits.
Dubai has entered into 92 double tax treaties across diverse income streams, such as dividends, royalties, interest, and real estate earnings. For international firms, the taxes remitted in Dubai can typically be offset against liabilities in their home countries, subject to the specifics of each treaty and the legal framework of their native lands.
Therefore, the logic behind the UAE’s tax strategy is clear: it’s a well-considered effort to diversify income sources, encourage international business, and ensure economic sustainability beyond oil. With its state-of-the-art infrastructure across various sectors, the UAE’s omission as a headquarters location represents a significant missed opportunity for global businesses. The UAE remains optimal for those seeking to thrive, work, and operate in a dynamic and forward-thinking environment.
