The United Arab Emirates (UAE) does not have a federal corporate income tax. However, each Emirate has the authority to impose taxes at its discretion. The absence of a federal corporate income tax contributes to the UAE’s appeal as a tax-friendly jurisdiction for businesses and investors.
In the UAE, Value Added Tax (VAT) was introduced on January 1, 2018, with a standard rate of 5%. Applicable to most goods and services, businesses must navigate VAT compliance, including registration, filing, and claiming input tax credits. VAT plays a crucial role in the country’s fiscal framework, impacting various sectors and international trade.
In UAE’s free zones, businesses often benefit from tax advantages, including exemptions from corporate income tax and customs duties. These zones provide a conducive environment for foreign investment, fostering economic growth and facilitating international trade. The absence of certain taxes enhances the appeal of free zones as strategic hubs for diverse industries.
