#UAE begins corporate tax roll-out, with free zones exempted | Reuters

UAE begins corporate tax roll-out, with free zones exempted | Reuters

The UAE began rolling out a 9% business tax on Thursday, with exemptions for the many free zones which power its economy, as the formerly tax-free oil producer seeks to boost non-oil revenue and remain a regional commercial hub.

The business tax follows a 5% value added tax (VAT) introduced in 2018, gradually eroding the United Arab Emirates' tax-free status that helped it carve out a role as an international trade and tourism hub and magnet for the ultra-rich.

The Ministry of Finance, in new regulations on Thursday, said qualifying entities in the UAE's more than 30 free zones - which export tens of billions of dollars of goods to neighbouring states - will be subject to a 0% rate, even when dealing with the mainland on certain strategic activities such as manufacturing, goods processing and logistics services.

"The regime has been designed to ensure strategic sectors will thrive in the free zones. Some level of migration may happen but the overall objective is ensuring the UAE remains attractive," Shabana Begum, MoF's executive director for tax policy told media, when asked whether the tax exemptions would encourage companies to relocate to free zones.