Abu Dhabi, the capital of the United Arab Emirates, wants to remain competitive at all costs. After transferring the agreement reached by the G20 countries in June to the new one global corporate tax rate of “at least 15%,” the Gulf metropolis has announced a reduction in the cost of setting up a business by “more than 90%” from Tuesday to boost the city’s “regional and international competitiveness,” which is home to the regional headquarters of many multinationals
In fact, there is virtually no corporate taxation in Abu Dhabi or neighboring Dubai (also a member of the United Arab Emirates). gold, pAccording to the Organization for Economic Co-operation and Development (OECD), which brings together the most developed countries, a tax haven is characterized by “nonexistent or insignificant taxes”. So that applies to the Emirates, but also to Jersey, the Bahamas, the Cayman Islands and Bahrain.
In a bid to ditch this image of a tax haven, the country simultaneously – and after signing it – on Monday still “welcomed” the G20 declaration signed by 132 of the 139 members of the OECD’s working group.
“The UAE supports a global consensus to fight tax evasion and profit shifting,” said Saeed Rashid al-Yatim, an official with the UAE Ministry of Finance.
The federal government also reiterated its support for the G20’s efforts to combat “tax evasion and profit shifting,” the various optimization strategies that allow large companies to largely evade taxation.
Similarly, the Gulf state is “fully committed” to working with the OECD and the G20 to achieve “a fair and sustainable outcome,” he added in a statement released by the official WAM agency.
The state, which is banking on its international brand image, will certainly try to “be seen as part of the global system and not as a tax haven,” commented Scott Livermore, chief economist at Oxford Economics Middle East, based in Dubai.
A different choice than the other financial services capital, the City of London, which is committed to not having to enforce this new tax.
Abu Dhabi and Dubai are cutting prices
In fact, Abu Dhabi is following in the footsteps of its neighbor Dubai. In June, the neighboring city announced a series of policies “aimed at reducing the cost of doing business and boosting economic growth.”
These measures, to be implemented “in the next three months,” are intended to “consolidate Dubai’s status as a global investment and business destination,” the emirate’s leadership readily stressed.
Likewise, “the cost of setting up a company in the Emirate of Abu Dhabi has fallen to 1,000 dirhams (about 230 euros), a reduction of more than 90 percent,” said the communication office of the local government on Sunday evening.
The reduction, which includes the elimination of certain fees – mainly registration fees with the authorities, registration with the chamber of commerce and municipal taxes – will apply from Tuesday, he said in a statement.
“Our goal (…) is to create a thriving business environment that encourages growth and innovation,” said Mohamed Ali al-Chorafa, Chairman of Abu Dhabi’s Economic Development Department.
Also, since June 1, foreigners can set up a company and hold all the capital (up from a maximum of 49% previously), which was previously only possible in certain free zones.
It should be noted that Abu Dhabi has a major new competitor in the Gulf, with the stated desire of Saudi Arabia, the Arab world’s largest economy, to break its dependency on oil.