Dubai Tax Haven & Its Long Term Sustainability

Dubai Tax Haven & Its Long Term Sustainability

Dubai Tax Haven & Its Long Term Sustainability

There are a few vital elements that are essential for a destination to become a global commercial hotspot. While factors like political stability, geographic location and bureaucratic ease rightfully come to mind, there’s one factor that often propels destinations as an international business hub- tax regulations.

In this blog, we will shed light on the long-term sustainability of the tax model from the viewpoint of a Tax Consultant in Dubai-

A century old tax-free model

Dubai, and UAE as a whole, have a long history of following a tax-free model that dates back to as far as 1905. It has been a vital cog in the miraculous growth story of Dubai that is often referred to as a living example of an ‘oasis in the desert’. One of the first cities to establish Free Zones in the GCC area, Dubai has garnered a reputation as a pro-business city backed with modern infrastructure.

One of the most interesting factors that make Dubai a favourite investment destination for multinationals is the option to register offshore and onshore companies in the Free Trade Zones. Modern architectural marvels like Burj Khalifa, Burj Al Arab and Palm Jumeirah stand witness to the versatility and longevity of Dubai as an attractive destination for corporations to invest their long-term future in.

Sustainability in the post-pandemic era

Most of the Arab countries in the Gulf region have been heavily dependent on oil for their growth in the past few decades. Global business analysts have for long questioned the sustainability of the oil fuelled growth in the Gulf region and after the Covid-19 pandemic, that point has been further amplified. Dubai was one of the first cities in the region to base their growth story on a diversified approach towards attracting global businesses. Dubai is now reaping rewards of that foresight and long-term vision as the world begins to pivot towards greener sources of fuel and reduce their dependence on oil. 

In line with an agreement signed by 130 countries to implement or increase Corporate tax, Dubai formally ceases to be a tax-free haven by introducing a Corporate tax of 9% from June 2023.

Dubai retains its competitive edge

Despite reaching a global consensus of implementing Corporate Tax, Dubai retains its edge as the best city in the region to start and grow a business. Their tax percentage of 9% on corporations is the lowest in the region, compared to their counterparts Saudi Arabia and Oman who have levied the tax at 20% and 15% respectively.

Other reasons such as the presence of numerous international schools and universities, cost of living and quality of life, vibrant and multicultural society, modern infrastructure, and the ease of travel to any part of the world play an important role in keeping Dubai head and shoulders above its GCC counterparts as an investment destination.

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