Ivanna Pylypyuk, the founder of Parus Corporate Services, shared her insights on how recent legislative changes, including the introduction of corporate tax, have impacted business in the UAE. Why this has only increased the attractiveness of doing business, the advantages of this step, and much more are covered in this article.
The UAE is no longer a tax-free jurisdiction for businesses. How has this changed doing business in the country?
The introduction of corporate tax has undoubtedly changed the business environment. Companies are now required to pay a 9% corporate tax on profits, which has necessitated the adaptation of business processes and improvements in financial management. Of course, this represents an increased burden for businesses and demands greater attention. However, the tax introduction also has its positive sides: the business environment has become more transparent and predictable, increasing the UAE’s attractiveness in the eyes of international investors. Among large corporations, the UAE’s reputation has become more stable and raises fewer questions.
Additionally, the extra tax revenues will help the government diversify the economy and reduce its dependence on oil revenues, contributing to sustainable economic growth. Another significant achievement is that the Financial Action Task Force (FATF) has added the UAE to its whitelist of countries. This is largely thanks to the introduction of corporate tax and the completion of standardization processes related to anti-money laundering (AML) screening. As a result, doing business in the UAE is safe from every perspective and fully aligned with international standards.
How critical is the current tax burden in the UAE for businesses?
The current tax burden in the UAE remains one of the lowest in the world. The corporate tax rate is just 9%, which is significantly lower than in many other countries, and this factor does not put substantial pressure on companies. The UAE offers special tax regimes for small businesses (Small Business Relief) and incentives for certain free zones. Offshore entities are still exempt from taxation, allowing them to be used for specific transactions.
For most businesses, the tax rate is not critical and allows companies to maintain high competitiveness. Of course, attention must be paid to company administration, as it is necessary to hire accountants and resolve outstanding compliance issues from previous periods.
Who will find the UAE an optimal choice for building a corporate structure? What types of activities will thrive in the UAE in 2024?
The UAE is particularly attractive now for international companies in sectors such as technology, finance, logistics, and e-commerce. For tech companies, the UAE offers advanced infrastructure and government support for innovation. Logistics companies can benefit from the country’s strategic location, while financial and fintech companies find a favorable ecosystem for growth.
Additionally, companies involved in international trade will also benefit from advantageous conditions. The jurisdiction is appealing for conducting real business and relocation, as there is no personal income tax in the UAE, which makes it possible to attract top talent from around the world.
However, the UAE is not a jurisdiction for everyone. Success here is achieved by companies with strong business models, whether they are large corporations or startups.
You have been living in Dubai for several years, during a time of significant legislative changes, especially regarding corporate taxes. Do you feel these changes? How has the UAE’s business climate evolved compared to, say, 2021?
Since the introduction of corporate tax in the UAE, the business climate has become more structured and transparent. Companies are paying more attention to tax planning and compliance with legislative requirements. This has improved corporate governance and enhanced the UAE’s reputation as a stable and predictable place for doing business.
Compared to 2021, the current business environment is more organized and open to international investors. The UAE remains a perpetual transit hub for capital, talent, and business. It is a highly competitive environment that attracts international companies.
What trends do you observe in the UAE? Where is the non-resident business sector headed?
The UAE continues to diversify its economy and actively develop sectors unrelated to oil. Particular attention is being paid to technology, fintech, sustainability, and renewable energy. Non-resident businesses are actively being attracted to the country thanks to low tax rates and favorable conditions for international operations.
At the same time, regulation and transparency are increasing, making the UAE attractive for sustainable, long-term business growth. The UAE aims to attract top talent and startups, as evidenced by its extensive long-term visa programs, including the well-known Golden Visas (10 years), Green Visas (5 years), and Blue Visas.
The government and each emirate have development plans offering excellent conditions for business relocation and family living. These include high levels of safety, exceptional service, cleanliness, comfortable living conditions, and the opportunity to earn a good income. This makes the UAE unique on the global stage.
