There is a growing trend of tax reforms in the Middle East region, and the United Arab Emirates (UAE) has implemented an excise tax and value-added tax (VAT) in October 2017 and January 2018, respectively.
Based on public sources, the United Arab Emirates is in the early stages of studying a federal corporate tax regime for the country.
Economic substance requirements
The United Arab Emirates introduced its economic substance requirements, effective from 1 January 2019, under the Cabinet of Ministers Resolution No. 31 of 2019 ('the Regulations'), requiring all in-scope UAE entities that carry on certain activities to have demonstrable economic substance in the United Arab Emirates from such date.
The introduction of the Regulations in the United Arab Emirates brings it in line with other jurisdictions that have recently issued economic substance legislation and affirms the United Arab Emirates’ commitment to addressing concerns around the shifting of profits derived from certain business activities to 'no or nominal tax jurisdictions' without corresponding local economic activities. This should also be seen as the United Arab Emirates making positive progress towards meeting the European Union’s (EU's) requirements to be removed from the EU list of non-cooperative jurisdictions for tax purposes (the 'EU blacklist'). See Economic substance requirements in the Other issues section for more information.