The UAE Cabinet has approved a federal budget of Dh192 billion ($52.27 billion) for 2024 to 2026.
It also approved the Federal General Budget for 2024, with estimated spending of Dh64.06 billion and revenue of Dh65.73 billion.
The distribution for next year allocates 42 per cent of the budget to the development and social benefits sector, 39 per cent to government affairs and 19 per cent for the development of infrastructure and financial and economic assets of the federal government.
The meeting at Qasr Al Watan in Abu Dhabi was chaired by Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai.
Sheikh Maktoum bin Mohammed, Deputy Prime Minister, Minister of Finance and Deputy Ruler of Dubai, writing on social media, said the budget "reflects the UAE’s steadfast commitment towards sustainable development and investing in the welfare of its people".
"We are working to implement plans and projects that put the people of the Union at the top of their priorities, because the UAE is a country of leadership and its people deserve the best," he added.
The UAE General Budget Committee met in June to discuss the draft general budget for 2024.
The UAE economy grew by 7.9 per cent last year, the highest in 11 years, after expanding 4.4 per cent in 2021, supported by its non-oil sector.
Abdulla bin Touq, Minister of Economy, said in August that the UAE's economy grew by 3.8 per cent on an annual basis to Dh418.3 billion in the first quarter of this year amid its push for diversification.
That was boosted by non-oil gross domestic product, which rose 4.5 per cent year-on-year to Dh312 billion.
New drug authority
Sheikh Mohammed also said the UAE government has issued a law to establish the Emirates Drug Authority, which he said will be the independent federal regulator for pharmaceutical and healthcare products.
"This official institution is responsible for regulating and licensing medical and pharmaceutical products, healthcare products, nutritional supplements, cosmetic products, veterinary products and those related to agriculture," Sheikh Mohammed said, writing on X, formerly known as Twitter.
"The goal is to make the country a globally trusted hub for pharmaceutical and medical industries, develop national capabilities in drug manufacturing, promote research and development and attract leading investments in the pharmaceutical sector to enhance pharmaceutical security."
Sheikh Mohammed said the Cabinet issued a decree regarding the members of the Financial Stability Council, which will oversee the country's financial infrastructure and be led by Sheikh Mansour bin Zayed, Deputy Prime Minister and chairman of the Presidential Court.
"The council aims to enhance and ensure financial stability, foster co-operation among financial authorities in the country, develop financial infrastructure, and increase the financial system's contribution to economic development," he said.
Sheikh Mohammed said the council included the Minister of State for Financial Affairs, the Governor of the Central Bank, the Chairman of the Securities and Commodities Authority, the Chairman of The Abu Dhabi Global Financial Market, and the Chairman of the Dubai Financial Services Authority, among others.
The Cabinet approved a policy for the digital government services standards, which Sheikh Mohammed said aims "to elevate the quality of digital government services, ensure their availability and guarantee their reliability".
Sheikh Mohammed said the Cabinet also approved the restructuring of the Emirates Space Agency Council under the leadership of Sarah Al Amiri, Minister of State for Public Education and Advanced Technology.
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
