United Arab Emirates

Corporate - Significant developments

Last reviewed - 31 July 2020

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

Based on public sources, the United Arab Emirates is in the early stages of studying a federal corporate tax regime for the country.

Economic substance regulations

On 30 April 2019, the UAE Cabinet issued the Cabinet of Ministers Resolution No. 31 of 2019 (concerning economic substance regulations in the United Arab Emirates, 'the ESR'), requiring all in-scope companies and other persons licensed by a UAE onshore or free zone authority ('licensees') that carry on certain activities ('relevant activities') to have demonstrable economic substance in the United Arab Emirates for financial years commencing on or after 1 January 2019.

The introduction of the Regulations in the United Arab Emirates brings it in line with other jurisdictions that have issued economic substance legislation and affirms the United Arab Emirates’ commitment to addressing concerns around the shifting of profits derived from certain business activities to 'no or nominal tax jurisdictions' without corresponding local economic activities. See Economic substance requirements in the Other issues section for more information.