Cross Border Investments  

The United Arab Emirates (UAE) has become a key location for international investments. However, the UAE's taxation system is poised for a significant change as a result of the shifting nature of the global economy.

1.    Value-Added Tax (VAT)

• 0% or 5% of taxable supplies made in the UAE (with VAT exemption on certain supplies)
• VAT registration threshold (also applies on foreign companies with fixed establishment in the UAE)
• Tax Grouping option

2.    Excise Tax (ET)

• Applies to specific goods harmful to health or environment such as tobacco and carbonated / sweetened drinks
• Applies on importing, manufacturing, stockpiling, and selling excise goods in the UAE
• Concept of Designated Zone applies

3.    Customs Duty (CD)

• 5% of goods imported at the first point of entry in the UAE
• CD exemption on imports to Free Zone
• Availability of temporary admission suspension regime

4.    Corporate Tax (CT)

• Applies to foreign companies with place of business or management in the UAE.
• Tax rate in the range of 0% - 9%.
• Small business relief and participation exemption benefit subject to conditions

5.    Transfer Pricing (TP) and Country by country reporting (CbCR)

• Mandatory TP documentation for entities with revenue > AED 200 Mn or Multinational entities (MNE) with group revenue > AED 3.15 Bn
• CbCR applies to ultimate parent entities of UAE headquartered MNE with group revenue > AED 3.15 Bn

6.    Economic Substance Regulation (ESR)

• Applies to UAE incorporated entities undertaking “relevant activities”
• Annual filing compliances and demonstration of substance in the UAE is a must.