UAE to impose federal corporate tax for the first time
Dubai, Jan 31: The United Arab Emirates announced Monday it is introducing for the first time a federal corporate tax on business earnings. It's the latest measure to bring the country in line with many governments worldwide but one that also chips away at its competitive advantage.
The UAE home to Abu Dhabi, Dubai and five other emirates has been steadily introducing new taxes as it seeks to diversify revenue from its mainstay of oil. It is unclear how the new 9% corporate tax on earnings will impact consumers as some businesses could raise their prices as a result.
Businesses across various sectors in the UAE are still reeling from the effects of the coronavirus pandemic. Untold numbers of foreigners, who comprise around 90% of the UAE's population, lost their jobs amid the pandemic and salaries were slashed in key industries such as tourism, real estate and the construction sector.
The UAE has recently taken steps to try and retain foreign investors, including loosening restrictions on business ownership rules and granting longer-term visas for some. It has also liberalised some of its Islamic laws around alcohol and unmarried couples, and moved to a Monday-Friday workweek.
Still, the UAE faces steep competition from neighbouring Saudi Arabia, which is working overtime to attract businesses and families to relocate to the kingdom.
The UAE's Ministry of Finance said the new federal tax of 9% on profits would be effective starting June 1, 2023. The corporate tax will not apply to personal income from employment, real estate and other investments, or to income earned from a business licensed outside the UAE.
The UAE has long positioned itself as a place where foreign investors are welcome and where incomes are tax free. Low taxes and a friendly business environment helped to transform the 50-year-old nation over the years.
The new corporate tax also does not apply to companies in Emirati free zones unless they conduct their business onshore. Another exception are oil and gas companies, which are subject to their own tax schemes.
Business profits of up to roughly 102,000 will not be taxed, the ministry said, in order to support small businesses and startups. Furthermore, foreign taxes can be credited against the UAE's corporate tax to avoid double taxation. The tax scheme will allow UAE business groups to be taxed as a single entity or apply for relief amid losses or restructuring.
Various emirates in the UAE have been steadily introducing fees and taxes in past years. After oil prices dipped dramatically in mid-2015, the government reduced some subsidies and imposed a 5% value added tax on most goods and services, a standard tax that is still lower than in many countries around the world.
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Pak, Afghan forces trade fire along Chaman border: Report
Islamabad (PTI): A heavy exchange of fire between Pakistani and Afghan forces was reported from the key Chaman border, according to a media report on Saturday.
Injuries were reported from the district hospital, but no fatalities occurred, the Dawn newspaper reported.
Officials from both sides accused each other of instigating the flare-up late on Friday night across the border in the Balochistan province.
While Pakistani officials said that Afghan forces had fired mortar shells on the Badani area, Afghan Taliban spokesperson Zabihullah Mujahid claimed it was Pakistan that launched an attack on Spin Boldak, alleging that their forces were responding.
Pakistan's official sources told Dawn that Pakistani forces retaliated against the Afghan aggression and returned fire.
There were also reports of fighting on the Chaman-Kandahar highway, but these could not be immediately verified.
A senior official in Quetta confirmed on condition of anonymity that the exchange of fire started around 10 pm and continued until late at night.
The medical superintendent of Chaman district hospital said that three injured, including a woman, were brought to the medical facility.
There was neither any official word from the Inter-Services Public Relations -- Pakistan Army's media wing -- nor from the Foreign Office.
The Chaman border crossing, also known as Friendship Gate, connects Balochistan province to Afghanistan’s Kandahar.
Relations between Pakistan and Afghanistan have deteriorated amidst regular allegations by Pakistan regarding the failure of the Afghan regime to deny safe havens to Tehreek-e-Taliban Pakistan terrorists.
The two countries had agreed on a ceasefire following tensions last month, but the Foreign Office said last month that technically there was no truce as it was contingent on the Afghan Taliban stopping terrorist attacks in Pakistan, which they had failed to do.
