The UAE government's revenue for the fourth quarter of last year jumped more than 8 per cent on an annual basis to Dh155.9 billion ($42.45 billion) as the Arab world’s second-largest economy continues to diversify its sources of revenue.
The total expenditure for the three months to the end of December also rose to Dh131.3 billion compared to Dh120.3 billion for the same period the previous year, the latest preliminary statistics from the Ministry of Finance show.
The total expenditure for the period comprised net investment in non-financial assets and current expenses, including employees’ wages, costs associated with the use of goods and services, consumption of fixed capital, paid interest, subsidies, grants, social benefits and other transfers.
The value of the government’s net lending/net borrowing – an indicator of the financial impact of government activity on other sectors of the economy – amounted to Dh24.6 billion, the ministry said.
“The UAE government is keen to diversify its revenue sources, while also ensuring optimal use of financial resources and improved efficiency of government spending,” said Younis Al Khoori, undersecretary of the Ministry of Finance.
“This will positively reflect on all aspects of development and enhance the country’s competitiveness and economic sustainability.”
The UAE introduced the federal corporate tax with a standard statutory rate of 9 per cent starting from the financial year beginning on or after June 1, 2023 to diversify its revenue.
It brought the income of companies exceeding Dh375,000 ($102,110) within the taxable bracket. Taxable profits below that level will be subject to a tax of zero per cent.
The move followed the introduction of a 5 per cent VAT on most goods and services in 2018. Duties are also applied to exports and imports on trade, which add to government revenue.
The UAE is committed “to fostering a dynamic economic environment and improving its tax system”, Mr Al Khoori said.
“These are in line with its strategic objectives of diversifying the economy and consolidating its position as a leading global business and investment hub.”
UAE is focusing on diversifying its economy away, with the non-oil sector continuing to grow amid new government initiatives and economic reforms.
The UAE economy is expected to grow by 5 per cent this year, driven by a robust expansion in the non-oil sector and an increase in foreign direct investment, Abdulla bin Touq, Minister of Economy, said last month.
The non-oil economy currently accounts for 73 per cent of the UAE’s gross domestic product in a “historic first for the country”, he said.
The country's GDP expanded by 3.7 per cent annually in the first half of last year, as it continued to pursue diversification goals, Mr bin Touq said in October.
Last year, the Ministry of Finance launched a four-year plan to help boost growth, with a focus on financial empowerment, sustainability, innovation, financial leadership and future foresight.
The 2023-2026 strategic growth initiative is in line with the objectives of the UAE Centennial Plan 2071, the Dubai Media Office said in August.
