So, the fun’s over. The ‘tax free’ tagline can be put to rest, as businesses across Dubai will now see their profits above AED 375,000 subject to a 9% corporate tax for the first time in the UAE.
You may be wondering whether this will have an impact on your business prospects, or whether it’s as appealing now to start a business as it was before the tax?
Well, this is my case to inform you not to panic, and to remind you that the UAE will 100% remain one of the most thriving business hubs in the world. If you’re still unsure about this, let me build my case.
- The Tax Rate for businesses is actually still pretty low globally
Before you start to think that a 9% tax is enough to put you off your business venture, it is worth viewing this introduction in context. This level of tax is well below the 23% global average, and will be the envy of many of the working world. While the tagline ‘tax free’ now needs revising, there’s still a huge appeal for business owners starting their new enterprise in the country.
While it might be a slight jolt to the system, comparatively we still have an enviable taxation rate.
- The barriers to entry remain low
The UAE has established itself as a hub for foreign investment and business opportunities, thanks to its strategic location, world-class infrastructure, and ease of launching a business. The country has implemented policies and initiatives to reduce bureaucracy, simplify procedures, and streamline processes that make it easier for entrepreneurship to thrive.
Entrepreneurs can swiftly establish their ventures, accessing a diverse and dynamic market with minimal red tape. The low barriers to entry ensure that businesses can efficiently establish themselves and focus on growth and innovation. No amount of tax can replace the freedom to do business on your own accord, without too much intervention.
- The region remains politically and economically stable
Ironically, the economic stability that the UAE moves towards is a result of moves such as the 9% corporate tax.
It’s always been critical for the UAE to diversify its revenue sources as the finite oil resource the country built its wealth upon depletes. The UAE will still have plenty of this resource to run down, but they’ve been aware for a long time that the money needs to come in from elsewhere. A booming tourism industry and diversification towards a lower level of taxation is a sure way of boosting stability in the region.
It’s worth noting that politically, too, the UAE has played a masterstroke in its positioning. Rather than sitting on any one side of the fence when it comes to political issues, the country often plays the role of mediator between countries looking to resolve disputes. Arguably a result of the stable monarchy that governs the UAE, this level of neutrality allows for the country to not get drawn into complex issues that could destabilize the system.
- Market access and strategic positioning is always a USP
There’s one thing that will never change about the UAE – its location. At the fulcrum point that connects European and Asian markets, Dubai is a crossroads between East and West, and its placement makes it very appealing for business owners looking for access to diversified markets.
From Hong Kong in the east to London in the west, Dubai is centrally located, with a thriving and diverse market at its fingertips. I don’t foresee a 9% taxation on profits above AED 375,000 derailing that.
Hopefully, these points alone are enough to put your mind at ease about the introduction of the corporate tax. We’re still very fortunate in this region to have such a low taxation rate, and I genuinely do believe that the country will continue to thrive.
If you want a piece of the action in the UAE, my team are ready to help you realize your business dream. Contact us by calling 800 BIZ, or email us at firstname.lastname@example.org to start a conversation about entrepreneurship.