UAE working to develop a 'strong and sustainable' tax ecosystem

The UAE is continuing to work towards developing a strong and sustainable tax ecosystem to boost its competitiveness, focusing on international co-operation to support its goals.

The country is supporting international efforts to address tax base erosion and profit shifting, which in turn will contribute to the continuous improvement of the global economic environment, Mohammed bin Hadi Al Hussaini, Minister of State for Financial Affairs, said on Wednesday.

He was speaking during a global taxation event in Dubai hosted by the UAE Ministry of Finance and the Organisation for Economic Co-operation and Development.

“The UAE adopts financial and tax policies, legislation and systems that serve its ambitious national development goals, while ensuring the highest levels of transparency and preventing financial and tax malpractices,” Mr Al Hussaini said.

“This commitment is in line with the international standards that are necessary to manage and implement tax systems, and to ensure the country’s leadership in this field.”

In 2018, the UAE joined the comprehensive framework of the Base erosion and profit shifting, or Beps, programme.

On June 1 this year, the UAE introduced federal corporate tax of 9 per cent.

Finance ministers from the Group of Seven countries agreed on a global minimum tax rate of 15 per cent in July 2021. Under the proposal, the minimum 15 per cent income tax will apply to the profits of multinational companies that are currently not subject to corporate income tax or to a rate lower than 15 per cent.

The intention behind this proposal is to end tax competition between countries.

Meanwhile, the Global Anti-Base Erosion Rules provide the means for establishing an internationally co-ordinated system of taxation that applies a top-up tax on profits when the effective tax rate is below the minimum rate.

UAE officials noted the importance of these rules, stressing that the progress being made demonstrates the “strength of international co-operation in achieving our common goals of building a strong and sustainable tax ecosystem through forward looking policies and legislation”.

“We are committed to developing a sustainable tax ecosystem and accumulating the expertise necessary to enhance the UAE’s global competitiveness as a leading global financial centre,” Mr Al Hussaini said.

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Under the UK government’s proposals, migrants will have to spend 10 years in the UK before being able to apply for citizenship.

Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.

But what are described as "high-contributing" individuals such as doctors and nurses could be fast-tracked through the system.

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The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.

Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks.

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.

8. Pillar 2 implementation

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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