Following the implementation of a federal corporate tax on business profits, Dubai will consider reducing fees on commercial activities to enhance the business environment in the emirate, the Dubai media office said Tuesday.

In the wake of the UAE Finance Ministry’s announcement on Monday of a 9.0 percent corporate tax on business profits, Dubai’s Department of Finance (DOF) said it is stepping up its efforts to improve a business environment that is growth-friendly for small and medium enterprises (SMEs).

As part of the UAE’s ambitious diversification drive, the new tax regime will take effect on January 1, 2023. UAE’s status as a tax-free haven for investors and corporates will significantly change with the implementation of this new taxation policy in line with international best practices.

The DOF is looking into the possibility of gradually decreasing fees on commercial activities in Dubai under the directives of Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council of Dubai.

Abdulrahman Al Saleh, the director general of the DOF, said the department’s efforts, which are aligned with federal financial laws, aim to empower businesses to succeed.

The DOF noted in a statement that corporate taxes are systematically applied in many countries around the world in ways that serve government interests and take into account the interests of companies in the long run. “The federal tax announced by the UAE Ministry of Finance on Monday, which will be at a low rate of nine per cent, is considered competitive and reflects best practices. It is among the lowest in the world and the lowest in the region.”

Al Saleh disclosed that the government is undertaking an analysis of all current and emerging variables related to Dubai-based companies.

“Under the directives of our wise leadership, and within the framework of the Public Revenue Structuring Programme, DOF is reviewing the business fees contributing, along with other sources of public revenues, to the financing of government projects. The new reality requires us to study and review the government fees system, in order to facilitate businesses and entrepreneurial projects,” Al Saleh said.

“The fees imposed by the Government of Dubai on commercial activities are affordable in the absence of corporate tax. Following the introduction of this tax, however, we will be keen, under the supervision of the General Secretariat of The Executive Council, to study those fees and look into the possibility of gradually reducing them in line with emergent trends,” said Al Saleh.

In order to align the revenues of the emirate with global best practices, a comprehensive analysis of the fees collected by all government entities within the government general budget will be undertaken as part of the revenue structuring program. By supporting economic growth and the business environment, the program works towards revenue sustainability and activation of the fiscal policy of the emirate.

The DOF said it would continue to work in cooperation with concerned authorities to develop policies that are considered ideal and attractive for foreign investments in key sectors, especially SMEs.

The DOF reiterated its support for free zone-based businesses and affirmed the continuation of current corporate tax incentives offered to companies within free zones that “comply with all regulatory requirements and do not conduct commercial activities in the UAE’s mainland.”

Source: Dubai to consider decreasing government fees on commercial activities – News | Khaleej Times