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United Arab Emirates seeks to clean up its reputation with introduction of corporation tax

United Arab Emirates (UAE) is cleaning up its reputation on the global stage with the introduction of corporation tax which will tax UAE-based businesses net revenues at 9%. As a mark of its intentions, the new tax will strengthen the country’s position as a world-leading hub for businesses and investment and will help it to meet its objectives of divestment away from hydrocarbons.

Most importantly, it will also help the country be on a more even footing with many western societies when it comes to tax transparency and how it handles its tax practices.

The introduction of the new tax can be seen as a new dawn for the country who has even extended the tax to its free zone locations and has insisted that companies operating in them have to submit corporate tax returns.

On the global stage, the new law puts the UAE closer to tax laws and regulations that we see in established western democracies such as Europe, and in fact, has now higher corporation tax than the likes of Malta.

Even so, setting the rate at 9% on net revenue over 375,000 AED (which is just over £80,000), makes the UAE an attractive country to look at for offshore company formation and offshore banking as the rate still remains competitively low, especially considering the UK stands at 25%. This, coupled with its new transparency rules moves the UAE from a country whose practices weren’t highly regarded into much more legitimate territory.

Alongside corporation tax, the country has reiterated that there are no plans to tax people’s personal income in Dubai or the rest of the UAE.

For those individuals looking to set up an offshore company and potentially offshore bank accounts who are keen to explore countries that operate closer to Western societies, the UAE could now be a great option. Our trusted team can explore your circumstances and make appropriate suggestions based on what you require.

Turner Little and its affiliates do not provide tax, legal or accounting advice. Material on this page has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.