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Tax Regulations in the United Arab Emirates (UAE)

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Corporate Tax

The UAE has a unique tax landscape, with some key points to note:

  • No corporate income tax: Except for companies in the oil and gas and banking industries.
  • Value Added Tax (VAT): The VAT rate is 5% and is imposed on most goods and services.

Value Added Tax (VAT)

The UAE has implemented various measures to simplify VAT compliance:

  • Tax groups: Entities located in the UAE can form a tax group to simplify VAT compliance.
    • Supplies between members of a tax group are disregarded for VAT purposes, and no VAT is charged.
    • A single VAT return is required for all members of a tax group.

Transfer Pricing

The UAE has not yet implemented transfer pricing regulations. However, it has:

  • Implemented Common Reporting Standard (CRS): To combat base erosion and profit shifting (BEPS).

Employment of Nationals

The UAE has an active “emiratization” program to promote the employment of UAE nationals in certain industries:

  • Trading, banking, and insurance: These industries are identified as key requirements for emiratization.

Double Tax Treaties (DTTs) and Tax Residency Certificate (TRC)

The UAE has an extensive network of DTTs and has implemented various measures to combat tax evasion:

  • 117 DTTs: With 88 in force.
  • BEPS Multilateral Instrument (MLI): In force in the UAE, modifying its selected 114 DTTs.

Asset and Share Purchases

From a corporate tax perspective, there is no difference between asset and share purchases. However:

  • VAT implications: VAT will be chargeable on the sale of assets located in the UAE at the time of supply, unless specific exceptions apply.