The UAE economy expanded by 3.6 per cent last year, driven by strong non-oil sector growth as the country continues to pursue its diversification goals.
The country's gross domestic product reached Dh1.68 trillion ($456.56 billion) at constant prices last year, preliminary estimates from the Federal Competitiveness and Statistics Centre showed on Thursday.
At current prices, meanwhile, the Emirates' GDP stood at Dh514.13 billion, representing an annual expansion of about 2.3 per cent.
The non-oil sector grew 6.2 per cent to Dh1.25 trillion last year, while the oil and gas sector contracted by 3.1 per cent.
Financial services was the fastest-growing sector in 2023 in the Arab world’s second-largest economy, expanding 14.3 per cent year-on-year after growing 6.6 per cent in 2022.
It was followed by transport and logistics, construction and real estate services, the data showed.
“The UAE’s economy has been remarkably resilient to both a lacklustre external backdrop as well as significantly higher interest rates in 2023,” Khatija Haque, head of research and chief economist at Emirates NBD, said in a research note on Wednesday.
“We expect public sector investment – particularly in transport and other infrastructure – to remain robust in 2024 and beyond, as the government has announced several large long-term projects including the expansion of the Etihad Rail network and Al Maktoum Airport.”
She added that this will continue to underpin non-oil GDP growth, offsetting any moderation in private-sector investment and household consumption.
The Dubai-based lender also raised its forecast for UAE’s non-oil growth this year to 5 per cent from 4.5 per cent previously, increasing the estimate for the country’s headline GDP growth to 3.7 per cent, from 3.3 per cent.
The UAE’s oil and gas production is likely to remain constrained by Opec+ production cuts this year, Emirates NBD said.
The producer alliance is widely expected by analysts to extend voluntary cuts of 2.2 million barrels per day until the end of the year. Opec+ currently has total output curbs of 5.86 million bpd in place, which is equal to about 6 per cent of the global demand.
“If there is an increase in the UAE’s target production level, this would pose an upside risk to our headline GDP growth forecast,” Emirates NBD said.
Earlier this week, the International Monetary Fund said it expected the UAE’s overall real GDP to expand by an annual 4 per cent this year, up from its April estimate of 3.5 per cent economic growth.
The IMF said that economic growth in the Emirates was broad-based, led by robust activity in the tourism, construction, manufacturing and financial services sectors.
The UAE is pursuing several economic initiatives, including Operation 300bn, a programme to position the country as an industrial centre by 2031 through efforts to increase the industrial sector’s GDP contribution to Dh300bn by 2031, from Dh133 billion in 2021.
The country's economy rebounded strongly from the slowdown caused by Covid-19, growing by 7.9 per cent in 2022, the most in 11 years, to Dh1.62 trillion at constant prices. It has maintained a robust growth momentum since.
Directed by Sam Mendes
Starring Dean-Charles Chapman, George MacKay, Daniel Mays
4.5/5
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
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It Was Just an Accident
Director: Jafar Panahi
Stars: Vahid Mobasseri, Mariam Afshari, Ebrahim Azizi, Hadis Pakbaten, Majid Panahi, Mohamad Ali Elyasmehr
Rating: 4/5
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
RESULTS
6pm: Al Maktoum Challenge Round-2 – Group 1 (PA) $55,000 (Dirt) 1,900m
Winner: Rajeh, Antonio Fresu (jockey), Musabah Al Muhairi (trainer)
6.35pm: Oud Metha Stakes – Rated Conditions (TB) $60,000 (D) 1,200m
Winner: Get Back Goldie, William Buick, Doug O’Neill
7.10pm: Jumeirah Classic – Listed (TB) $150,000 (Turf) 1,600m
Winner: Sovereign Prince, James Doyle, Charlie Appleby
7.45pm: Firebreak Stakes – Group 3 (TB) $150,000 (D) 1,600m
Winner: Hypothetical, Mickael Barzalona, Salem bin Ghadayer
8.20pm: Al Maktoum Challenge Round-2 – Group 2 (TB) $350,000 (D) 1,900m
Winner: Hot Rod Charlie, William Buick, Doug O’Neill
8.55pm: Al Bastakiya Trial – Conditions (TB) $60,000 (D) 1,900m
Winner: Withering, Adrie de Vries, Fawzi Nass
9.30pm: Balanchine – Group 2 (TB) $180,000 (T) 1,800m
Winner: Creative Flair, William Buick, Charlie Appleby
