Corporate Income Tax Rate.       (%)0*

Capital Gains Tax Rate.                (%)0*

Branch Tax Rate.                          (%)0*

Withholding Tax                           (%)0*

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No taxes are imposed by the federal government of the United Arab Emirates. See Section B for further information.

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TAXES ON CORPORATE INCOME AND GAINS

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Corporate income tax. Although no federal taxation currently exists in the United Arab Emirates (UAE), each of the individual Emirates (Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain) has issued corporate tax decrees that theoretically apply to all businesses established in the UAE. However, in practice, these laws have not been applied. Taxes are currently imposed at the Emirate level only on oil and gas producing companies in accordance with specific government concession agreements, and on branches of foreign banks under specific tax decrees or regulations or in accordance with agreements with the Rulers of the Emirates in which the branches operate.

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The preceding paragraph describes how the practice has evolved in the UAE at the level of the individual Emirates. No general exemption is contained in the Emirates’ tax decrees. Persons investing in the Emirates should be aware of the risk that the tax decrees may be more generally applied in the Emirates in the future and of the remote risk that they may be applied retroactively. They should also bear in mind the potential introduction of federal-level taxation in the medium to long term.

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In August 2015, the UAE Ministry of Finance (MoF) announced the potential introduction of corporate tax in the UAE. No further details have been provided with respect to the proposed tax rate or timeline. The MoF stated that after an announcement has been made that the draft law has been finalized, it will be at least 12 months before businesses will be required to fulfill their UAE corporate tax obligations. This will allow businesses to prepare for the implementation of the corporate tax.

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Tax incentives. Several of the Emirates have free zones that offer tax and business incentives aimed at making the UAE a global financial and commercial center. The incentives usually include tax exemptions for a guaranteed period, the possibility of 100% foreign ownership, absence of customs duty within the free zone and a “one-stop shop” for administrative services. The free zones include, but are not limited to, the Dubai Airport Free Zone (DAFZ), Dubai International Financial Centre (DIFC) (typically for financial services), Dubai Internet City (DIC), Dubai Media City (DMC), Dubai Multi Commodities Centre (DMCC), Dubai South (DS), Jebel Ali Free Zone (JAFZ), and Abu Dhabi General Markets (ADGM; typically for financial services). Approximately 20 free zones are located in the Emirate of Dubai alone.

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To continue reading, and to obtain the full publication, please visit: https://www.ey.com

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The content is based on information current as of 1 January 2018, unless otherwise indicated in the text of the chapter. Changes to the tax laws and other applicable rules in various countries covered by this publication may be proposed. Therefore, readers should seek independent tax advice from their local and international firms to obtain further information.

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This publication contains information in summary form and is sourced from the Ernst & Young Worldwide Corporate Tax Guide, and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Aston & Willson LLP  or EYGM Limited nor any other member of an organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.