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.