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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NDA's win in Bihar Assembly bypolls a matter of concern: Prashant Kishor
Patna, Nov 23: Political strategist turned activist Prashant Kishor on Saturday dubbed as "a matter of concern" the NDA's win in assembly by-polls in Bihar despite "failure" of the BJP-led coalition to end the state's chronic backwardness during it's decades-long rule.
Talking to reporters here shortly after the results were out, Kishor also drew succour from the fact that his fledgling Jan Suraaj won "10 per cent" of the total votes polled in four seats, but rubbished the claim that it had played a role in the RJD's defeat in three of these.
"RJD is a 30-year-old party. The son of its state president finished third. Can Jan Suraaj be faulted for that? In Belaganj all Muslim votes went to the JD(U) candidate. In Imamganj, the Jan Suraaj cut into NDA votes. Else, the victory margin of (Union minister) Jitan Manjhi's Hindustani Awam Morcha would have been bigger", asserted Kishor.
Notably, Imamganj, a reserved seat, was retained by Manjhi's daughter-in-law Deepa, who defeated the RJD candidate by a thin margin of less than 6,000 votes. Jan Suraaj candidate Jitendra Paswan finished third, polling more than 37,000 votes.
When pointed out that in three of the four seats, candidates of Jan Suraaj had polled less than one-sixth of the total votes and ran the risk of losing their deposits, Kishor shot back "That should not be a matter of concern (chinta ki baat). If there is a matter of concern, it is the ability of the NDA to make a clean sweep despite having ruled Bihar for so long and "failed" to end the state's backwardness".
The IPAC founder, who had a brief stint in the JD(U), insisted that the party's supremo Nitish Kumar, the Chief Minister of Bihar, was a "spent force" and its candidate, former MLC Manorama Devi, had won on her own steam.
"We have always said that our fight is with NDA, not with RJD despite its claim of being the largest party in Bihar.....(but) Nitish Kumar is no factor. His party polled just about 11 per cent of total votes", said Kishor.
About his own party's inability to make a mark, Kishor said "We have secured 10 per cent votes..... in seats where Jan Suraaj had no presence since these areas were yet to be covered by my padyatra. Also, please note that we got our poll symbol after filing of nomination papers was over".
He also maintained that the Jan Suraaj will go solo in the assembly polls due next year when it will contest "all 243 seats".
"We were initially written off but by garnering about 10 per cent votes, in a state known to vote along predictable caste lines, we have proved a point. In the next few months we shall be strengthening the organization to ensure that vote share of the Jan Suraaj improves", he said.
