United Arab Emirates

There is a growing trend of tax reforms in the Middle East region, and the United Arab Emirates (UAE) has implemented excise tax, value-added tax (VAT), and economic substance regulations in October 2017, January 2018, and April 2019, respectively. Country-by-country (CbC) reporting was also implemented in April 2019. 

On 31 January 2022, the UAE Ministry of Finance (MoF) announced the introduction of a federal corporate tax (CT) in the United Arab Emirates that will be effective for financial years starting on or after 1 June 2023. On 03 October 2022, the Federal Decree-Law No 47 of 2022 on the Taxation of Corporations and Businesses (‘UAE CT Law’) was signed. 

UAE CT will be applicable across all Emirates and will apply to all business and commercial activities subject to certain exceptions. Transfer Pricing (TP) rules and documentation requirements are also introduced as part of the UAE CT regime. The Federal Tax Authority (FTA) will be responsible for the administration, collection, and enforcement of CT.

Economic substance regulations

On 30 April 2019, the UAE Ministry of Finance issued economic substance regulations ('Regulations'), which were followed by the amended Regulations on 1 September 2020 introducing a requirement for certain juridical persons (persons with separate legal personality) and unincorporated partnerships that carry on a relevant activity in the United Arab Emirates ('UAE licensees') to have adequate 'economic presence' in the United Arab Emirates, relative to the activities they undertake.

It is currently unclear what impact the proposed UAE CT regime will have on the ESR requirements in the UAE, especially in relation to entities subject to CT at 9% rate.  

See Economic substance requirements in the Other issues section for more information.