UAE begins corporate tax roll-out amid diversification push

UAE begins corporate tax roll-out amid diversification push

DUBAI - The UAE began rolling out a 9% business tax on Thursday, with relief for small firms and likely exemptions for export-focused free zone activities, as the formerly tax-free oil producer seeks to boost non-oil revenue and remain a regional commercial hub.

The business tax follows a 5% value added tax (VAT) introduced in 2018, gradually eroding the United Arab Emirates' tax-free status that helped it carve out a role as an international trade and tourism hub and magnet for the ultra-rich.

Some tax regulations have not yet been published, including details on how income earned by entities in the UAE's more than 30 free zones - which export tens of billions of dollars of goods to neighbouring states - will be taxed.

The government has said it introduced the tax to align with international efforts to combat tax avoidance, as well as to address challenges arising from the digitalisation of the global economy. The UAE does not levy personal income taxes.

Tax reform is gradually appearing across the Gulf Cooperation Council (GCC) which has historically funded budgets from hydrocarbon revenues. In 2017 GCC states agreed to introduce VAT.

S&P ratings agency estimates the tax could add 1.5%-1.8% of gross domestic product from 2025