According to financial and market analysts, the tax system of the United Arab Emirates is one of the important factors that triggered rigorous development of the country, and turned it into major business and financial center.
There is no common tax legislation at the federal level. Each Emirate has its own tax policy in the UAE. The common feature of all the Emirates of the UAE is their commitment to create the most friendly conditions for business. Therefore, tax system may be considered as fairly friendly and it provides opportunities for business development for those companies which are already present in the country.
The country tax system of the UAE does not include direct taxes except for revenues from oil and banking sector. The revenue of the country is generated by indirect taxes.
Indirect taxes are collected in the form of various fees and charges. For example, compulsory annual fee for renewal of registration of offshore companies represents an indirect tax.
For onshore companies it is annual fee for license, and payment for lease of premises, which, in case of companies in free trade zones, normally are owned by administration of the free trade zone.
There are also various additional fees, e.g. cost incurred for obtaining resident visas, compulsory ID cards for residents of the UAE, road taxes, notary services rendered by notaries public exclusively, etc. Accordingly, all such fees may be treated as indirect taxes.
In total, such fees make up only a little percent of business revenue and virtually do not affect business profitability. In addition, such fees are fixed and do not depend on your income. This implies that, provided your business is successful, such official fees may be disregarded due to their insignificance for business in percentage to your business income.
Subject to the aforesaid, the UAE is one of the most attractive and efficient countries in the world for doing business.
