No Income Taxes in the UAE

April 12, 2012 Taxation in UAE

No taxes for business in the UAEDUBAI – The United Arab Emirates will not be implementing any corporate or personal income taxes for at least another two years, and proposals to institute a Value Added Tax system are equally far off into the future.

During an interview on a local television channel on March 11th the Minister of Finance and Industry of the United Arab Emirates Hamdan bin Rashid Al Maktoum confirmed that the UAE will not see the introduction of a corporate income tax in the budget plan for the years 2012 or 2013, and said that the UAE also currently has no plans to impose any government service fees, and does not intend to implement income taxes on individuals’ incomes.

However, he did concede that tax authorities are conducting new feasibility studies on potentially instating corporate and personal income taxes in the future, adding that “…this updating is intended as a future indicator and does not mean we have decided to introduce taxes.”

The Minister also said that the UAE is currently engaged in discussions with its partners in the Gulf Cooperation Council over a proposal to introduce a common Value Added Tax, but the plan is still in early discussion stages and no such tax would be put into place in the nearest future.

In the interview the Minister pointed out that the UAE has no pressing need to implement new taxes, as it does not currently require extra tax revenues to meet its own budgetary spending. He added that “…by the end of the fiscal year, we find that there is no actual deficit. We still have enough financial resources to finance the budgeted spending.”

The international media has previously discussed the possibility of implementing the taxes in the UAE, and according to a report recently released by the International Monetary Fund, the UAE is investigating potential tax measures as a means of reducing the regions reliance on oil revenues in the future.

Photo by Danny McL