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28 March 2024

UAE to finish drafting corporate tax, VAT laws this quarter

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By Reuters

The UAE, seeking to bolster state revenues, is likely to complete the drafting of laws introducing corporate tax and value-added tax in the third quarter of this year, a senior Ministry of Finance official said on Thursday.

"The draft of the corporate tax law and the value-added tax law has been discussed with the local and federal governments," Younis Haji Al Khouri, under-secretary at the ministry, told Reuters.

He added that authorities were still evaluating the social and economic impact of the laws, but drafting was expected to be finished "very soon, within the third quarter of this year".

Khouri declined to comment on the proposed tax rates or when they might take effect. There are often gaps of many months or years between the drafting of UAE laws and their going into effect upon approval by the president.

Introducing corporate tax and VAT in the UAE, which has promoted its low-tax environment to investors, would be a major shift in policy, and politically sensitive.

Officials have said in the past that VAT is unlikely to be introduced before adjacent countries adopt it too.

A UAE Ministry of Finance report released on Thursday said the cabinet had approved versions of the corporate tax and VAT draft laws. It said the ministry was working on the creation of a federal tax authority, but did not say when the body might start operating.   

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