Money & BusinessUAE
UAE: Free zones will constraint fiscal benefits of new corporate tax
The fiscal benefits of United Arab Emirates’ new corporate tax will be constrained by the large role of free zones, which are exempt from the tax, on its non-oil economy.
The UAE will introduce its first tax on business profits, a levy of 9 percent, in June 2023.
The UAE, along other Gulf oil-producing countries, are seeking ways to make their economies less reliant on oil.
While broadly credit negative for domestic UAE companies, the tax’s overall impact on large corporates would be muted because of the free zones as well other potential offsetting levers, such as increasing prices, optimizing cost structures, and cutting dividends.
