| 22 April 2024, Monday |

No UAE employee income tax ‘on the table’, minister says

According to Thani Al Zeyoudi, the UAE’s Minister of State for Foreign Trade, the UAE would not impose an employee income tax.

During an interview with Bloomberg TV, Mr Al Zeyoudi said, “It is not on the table at all currently.”

From the financial year beginning on or after June 1, 2023, the UAE will impose a 9% federal corporate tax on profits earned by firms, according to the Ministry of Finance.

According to the ministry, the corporate tax policy would be among the most competitive in the world and will comply with WTO norms.

Personal income “from employment, real estate, and other investments, as well as any other income earned by individuals that does not arise from a business or other form of commercial activity licensed or otherwise permitted to be undertaken in the UAE” will be exempt from taxation, according to the ministry at the time.

Mr Al Zeyoudi stated that the UAE’s new corporate tax has been greeted “quite positively by enterprises in general.”

“We have to follow international guidelines.” Last year, the Organization for Economic Cooperation and Development (OECD) indicated that most of the world would implement it [corporate tax].

“With all of the reforms we’ve done recently, we’ve become more connected to the rest of the globe.”

The OECD announced in October that 136 nations had reached an agreement to ensure that large corporations pay a minimum tax rate of 15% starting in 2023.

According to the OECD, governments would collect around $150 billion in new tax income each year as a result of the global agreement, while multinational corporations will reallocate $125 billion in earnings to the countries where they operate.

Companies having revenues of more than €750 million ($868 million) will be subject to the new minimum tax rate.

According to Mr Al Zeyoudi, the charge will replace “most of the costs” that businesses currently pay and will be one of the lowest in the world.

Governments levy corporate taxes on a company’s earnings, which are the difference between revenue and costs.

According to Egyptian investment bank EFG Hermes, the UAE’s intention to establish corporation tax is in line with the proposal on a global minimum tax.

According to the report, the project underscores attempts by global economies to decrease international tax fraud, particularly by corporations.

People pay income tax on their wages in countries with personal taxes, according to Keren Bobker, an independent financial consultant and senior partner of Holborn Assets in Dubai.

  • The National News