Tax Services

UAE Corporate Tax & Investment Managers – Rules & Exemptions

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Below is a high-level overview of how UAE corporate tax (CT) applies to investment managers operating in the UAE under the Federal Decree-Law No. 47 of 2022 (and related Ministerial Decisions).

This is a general summary, not legal advice—always check with a UAE tax professional for your specific circumstances.

General Rule: UAE-Resident Businesses are Subject to CT

  1. UAE-Resident Companies
    • Any UAE-incorporated entity, including an investment management firm, is considered resident for UAE CT.
    • Such entities are subject to 9% corporate tax on annual taxable profits exceeding AED 375,000, with 0% applicable on the first AED 375,000 of taxable profit.
  2. UAE Branches of Foreign Companies
    • A foreign investment manager operating through a branch in the UAE would typically be subject to CT on the branch profits attributable to the UAE activities.

Potential Exemptions or Special Regimes

  1. Qualifying Free Zone Person
    • If the investment manager is registered in a Free Zone (e.g., DIFC, ADGM) and meets the “Qualifying Free Zone Person” (QFZP) criteria, it may benefit from a 0% CT rate on “Qualifying Income.”
    • However, you must satisfy strict substance, independence, and activity requirements (including not generating income from the UAE mainland unless it is “passive” or otherwise allowed). If the manager’s clients or activities are primarily in the mainland, the 9% rate likely applies.
  2. Qualifying Investment Fund Exemptions
    • The law provides an exemption for “Qualifying Investment Funds”, but generally the fund itself might be exempt—not necessarily the manager who earns fee income.
    • In most structures, the manager is a separate legal entity providing services for a fee, so it would not be exempt unless it also meets other QFZP or statutory exemption criteria.
  3. “No PE” for Offshore Funds vs. Manager Profits
    • The concept of a “no permanent establishment (PE)” safe harbor (sometimes loosely compared to the UK “investment manager exemption”) is about protecting non-resident investors/funds from UAE tax.
    • That does not exempt the UAE-based manager’s own profits from UAE corporate tax; it simply prevents the offshore fund from being taxed in the UAE. The manager’s own income (fees, performance fees, etc.) is still subject to normal UAE CT rules.

Conclusion: Most Investment Managers Pay UAE Corporate Tax

  • Yes, in general, if you run an investment management or fund management business from the UAE, you are subject to UAE corporate tax on the profits of that business, unless you qualify for a free zone or other specific exemption.
  • Even in a free zone (e.g., DIFC or ADGM), you only get the 0% rate on “Qualifying Income” if you meet all conditions of being a Qualifying Free Zone Person.
  • Simply providing investment management services (charging management or performance fees) does not automatically grant an exemption—you would file corporate tax returns and be taxed at 0% on your first AED 375,000 of profits and 9% on the excess.

Bottom line:

  • If you are a mainland or onshore investment manager, expect to pay UAE CT at the standard rates.
  • If you are in a free zone and meet QFZP criteria, you may enjoy a 0% rate on qualifying income, but must comply with free zone and UAE CT rules to maintain that status.
  • The law’s safe harbor that protects offshore funds from having a UAE PE does not exempt the UAE manager’s own fee income from CT

To learn more about how Affiniax can help you, please contact us at mail@affiniax.com

Role of External Audits in Achieving Financial Transparency

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How external audits contribute to financial transparency & business growth.

In today’s competitive business landscape, financial transparency is no longer a luxury but a fundamental pillar of success. This article explores why external audits are critical for achieving financial transparency which is a prerequisite for long-term business success.

Whether you are a startup or an established enterprise, ensuring that your financial processes and outcomes are transparent is crucial for building trust, attracting investment, and sustaining growth.

At Affiniax Partners, we are committed to supporting our clients in achieving financial transparency for long-term growth.

The Need for Financial Transparency For Long-Term Business Growth

  1. Build Trust and Credibility Financial Transparency fosters trust among stakeholders. When a company publicly shares its financial health and performance, it reassures investors, clients, and employees that there are no hidden agendas. This trust strengthens relationships and enhances collaboration, providing a solid foundation for long-term success.
  2. Attracts Investment Investors seek companies that offer transparency in their financial dealings. Transparent and honest reporting of assets, liabilities, and profits ensures investors can make informed decisions. The credibility that comes with financial transparency makes businesses more attractive to potential investors, helping them secure the capital they need for growth and innovation.
  3. Improved Decision-Making Translucent financial data gives leaders accurate insights into their company’s performance. This empowers them to make well-informed, strategic decisions aligned with short-term and long-term objectives. When financials are transparent, business leaders can identify potential areas for improvement and capitalise on growth opportunities.
  4. Enhances Reputation A company renowned for its financial transparency tends to cultivate a positive reputation. This reputation can aid in building a loyal customer base, attracting top talent, and fostering stronger partnerships. Firms that embrace a transparent financial approach demonstrate their commitment to ethical practices, setting themselves apart in a competitive marketplace.
  5. Long-Term Sustainability Financial transparency is a crucial element of long-term sustainability. By broadly sharing financial information, companies ensure they can tackle challenges, seize opportunities, and maintain operations without disruption. Transparency enables businesses to adapt to market changes, manage risks effectively, and stay on track to achieve their goals.

How External Audits May Enhance Financial Transparency and Boost Stakeholder Confidence

An external audit is a crucial instrument for promoting financial transparency. Conducted by an independent third-party firm, an external audit verifies the accuracy and integrity of a company’s financial statements. These audits enhance stakeholder confidence by assuring investors, regulators, and other key parties that the company’s financial health is represented honestly and accurately.

One key benefit of external audits is ensuring compliance with IFRS (International Financial Reporting Standards), a globally recognised accounting framework that guarantees consistency and reliability in financial reporting. By adhering to IFRS, businesses demonstrate a commitment to high-quality financial reporting that stakeholders worldwide can trust.

Boosting Stakeholder Confidence

Investors, shareholders, and creditors rely on accurate financial information to make informed decisions. External audits ensure the company’s financial statements comply with accounting standards, reducing fraud and misrepresentation risk. As a result, companies can build stronger relationships with stakeholders, who gain confidence in the company’s governance and financial practices.

Regulatory Compliance and Mitigating Risk

Alongside compliance with IFRS, external audits ensure businesses meet specific industry regulatory requirements. Whether related to tax laws, reporting mandates, or financial regulations, external audits serve as a safeguard that helps companies maintain good standing with regulatory bodies. This minimizes the risk of legal penalties, reputational damage, or non-compliance, which can have far-reaching consequences for a business’s success.

How Affiniax Contributes to Financial Clarity and Business Success

At Affiniax Partners, we recognise the critical importance of financial transparency in fostering business success. Here’s how we assist businesses in achieving transparency and flourishing:

  1. Ensuring the Accuracy of Financial Reporting: We deliver precise, clear, and consistent financial reports that assist businesses in accurately presenting their financial health. Our expert team ensures that every report is accurate and insightful, facilitating a better understanding of the company’s financial position for stakeholders.
  2. Internal Control Assessment: Robust internal controls ensure transparency. We evaluate and assist in improving internal control systems to protect against fraud and errors, assuring that your financial processes remain secure and transparent at every operational level.
  3. Legal and Regulatory Compliance: Our firm agrees that businesses adhere to all relevant financial regulations and reporting standards. By keeping informed about the continually changing financial laws, we assist companies in avoiding legal risks and maintaining compliance, ensuring that all financial disclosures are precise and within legal frameworks
  4. Risk Assessment and Management: We provide comprehensive risk assessment services to assist businesses in identifying potential financial, commercial, and operational risks and any associated risks they may need to consider. By pinpointing vulnerabilities, we enable companies to mitigate these risks proactively, ensuring that transparency encompasses specific reporting and preparation for future challenges.
  5. External Audits and IFRS Compliance: Our external audit services ensure that an entity’s financial statements comply with IFRS, ISA, and all relevant reporting interpretations and the industry’s best practices. We assist management in establishing trust with investors, stakeholders, and regulators by meticulously reviewing and verifying the accuracy of the entity’s financial and related data.
  6. Value-Added Insights: Beyond financial reporting, we offer strategic insights that assist businesses in optimising their fiscal strategies. Our comprehensive analysis and customised recommendations facilitate informed decision-making, aiding companies in enhancing their economic performance and positioning themselves for sustainable growth.

Conclusion

Financial transparency is essential for long-term success in today’s dynamic business environment. It builds trust, attracts investment, informs decision-making, and strengthens a company’s reputation, which is crucial for sustainable growth. By adhering to strict financial reporting standards and undergoing external audits, businesses can ensure that their financial practices are reliable and transparent.

At Affiniax Partners, we are committed to helping businesses achieve financial clarity through accurate reporting, compliance, risk management, and audit & assurance services. Let us guide you in unlocking the full potential of financial transparency, enabling your business to thrive in an ever-evolving market.

Ready to take the next step toward financial clarity? Contact us today to learn how we can help you reach your business goals.

EmaraTax – Important Alert for all Tax Payers (from FTA – Federal Tax Authority, UAE)

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EmaraTax

Effective 5 December 2022, FTA online e-services portal shifted to EmaraTax.

It is important for all Tax Payers to access the online FTA account through the new online e-services portal now “EmaraTax”.

To access the online FTA e-services account (for all Tax Payer services e.g., Submitting VAT returns etc.) all Tax Payers must reset the password by following the instructions provided on the FTA’s website.

It is advised that all Tax Payers holding valid accounts with FTA must reset their password by following the instructions providing on the e-services portal of FTA https://eservices.tax.gov.ae/.

Once the password reset request is generated, Tax Payer shall receive an email from official FTA emailer with <Temporary Password>, once that <Temporary Password> is entered on the new online e-services portal (EmaraTax) of FTA, Tax Payers will be eligible to set a new password to the online FTA e-services portal (EmaraTax) and fulfill their Tax Obligations.

Since this is a major transition, it is advised that all Tax Payers have the procedures followed as described by the FTA.

It is important to understand that the new system offer only “4 Attempts” (with incorrect/invalid/old password) to access the online FTA account. Should you require any assistance in updating the password to access the new online FTA’s e-services portal “EmaraTax”, reach us at taxation@affiniax.com and we will assist you through this transition smoothly.

#EmaraTax #FTA

Corporate Tax (0% and 9%) in UAE from 1 June 2023

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Corporate Tax (0% and 9%) in UAE

Introduction and effective date

In a landmark decision, the Ministry of Finance (“Ministry”) on 31 January 2022 announced the United Arab Emirates (“UAE”) will introduce Corporate Tax (type of direct taxes) effective on or after 1 June 2023. The Federal Tax Authority (“FTA”) will be responsible for the enforcement, collection, and administration of UAE Corporate Tax. Corporate Tax will be applied to all UAE businesses and commercial activities alike, except for the extraction of natural resources, which will remain subject to Emirate level Corporate Taxation.

The news came in as the UAE aims itself as a world-leading hub for business, innovation, and competitiveness to align itself on a global level for achieving transparency and preventing harmful Taxes practices together with accelerating the UAE’s development and transformation to achieve its strategic objectives.

 Rate of Corporate Tax and threshold

The Corporate Tax Rate will be

9% Standard rate for companies (with annual income above AED 375,000)

0% to support a small business (with annual income below AED 375,000) – to that, the Ministry added, “The Tax regime will be amongst the most competitive in the world.”

A different tax rate for large multinationals that meet specific criteria set with reference to ‘Pillar Two’ of the OECD Base Erosion and Profit Shifting project (this will further be explained in the legislation).

 Examples for Corporate Tax application

A business that has a financial year starting on 1 July 2023 and ending on 30 June 2024 will become subject to UAE CT from 1 July 2023 (which is the beginning of the first financial year that starts on or after 1 June 2023). The taxable income will be the accounting net profit / income of a business after making necessary adjustments for certain items to be specified under the UAE Corporate Tax Law (draft not yet available).

 Exclusions (out of scope of UAE Corporate Tax) – explicitly defined by the Ministry of Finance.

Personal income from employment

Real Estate Investment (by individuals)

Dividend income, capital gains, and other income earned from owning shares or other securities (by individuals), also Dividends and capital gains earned by a UAE business from its qualifying shareholdings will be exempt.

Interest income (by individuals)

Any income generated by an individual (which is not arising as a result of a business)

No withholding Taxes

Free zone businesses will be subject to UAE Corporate Tax, but the UAE Corporate Tax regime will continue to honor the Corporate Tax incentives (if any) currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE.

 Corporate Tax Returns – the cycle of submission

Only one Corporate Tax Return will need to be filed per financial period; no provisional or advance CT filings will be required, and a financial period will generally be a year. UAE businesses will not be required to make advance UAE Corporate Tax payments (as observed in regimes in other countries).

Corporate Tax Violations

Similar to other Taxes in the UAE (e.g., VAT), businesses will be subject to penalties for non-compliance with the Corporate Tax regime.

Immediate action required

UAE companies will need to consider impact assessment and readiness towards the Corporate Tax and its implementation and upgrade ERP as required.

To understand accurately how this Corporate Tax regime will impact your business, preparing an implementation plan, and assistance with reporting and updating your ERP, reach out to our Tax Team at Taxation@affiniax.com.

 

Author Jilal Ahmed – 31 January 2022

Affiniax Partners collaborates with Pagero for KSA Compliance

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Saudi Arabia Business Advisors

Affiniax Partners is very pleased to announce it has collaborated with Pagero, a digital solution company with 20+ offices worldwide that has dedicated itself to the success of multiple conglomerates since its founding in 2009. Pagero is offering support to companies through the digitalisation of the accounts receivable and payables process; and distribution of electronic invoices in line with their ERP system. It provides access to an open, global, cloud-based network that makes on-boarding, connecting and compliance effortless.

The e-invoicing mandate in the Kingdom of Saudi Arabia, implemented from December 4 th 2021 (Phase 1), means that each invoice issued by the resident taxable person in KSA will be required to meet certain format specifications laid down under the law. The taxpayers are required to generate and archive invoices electronically according to the new content requirement. Under the implementation plan, ZATCA will be notifying taxpayers within 6 months’ before 1 st December 2023 (Phase 2) to connect with the invoicing platform.

Our collaboration will ensure that our KSA clients are compliant with the local laws of the country, implementing changes within their existing model where necessary. We continually seek new ways to better meet the needs of our clients by sharing ideas, training programs, and technical expertise. We look forward to being an active contributor in this digital transformation phase in the Kingdom of Saudi Arabia.

To know more about the project or the compliance requirements in KSA, please contact our Affiniax Partners team.

PHISHING ALERT: UAE VAT

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“We are aware that a number of clients have been sent emails and letters from fraudsters pertaining to be the Federal Tax Authority or Banks and requesting for certain details from them. The Federal Tax Authority would generally only communicate with registrants through emails from the domain tax.gov.ae sent to the registered email address, or via your eservices.tax.gov.ae portal and registered number. If you are uncertain as to the genuineness of communication received, please feel free to contact our VAT services team for guidance.”

OFFSHORE COMPANIES IN THE UNITED ARAB EMIRATES

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Offshore Companies in The United Arab Emirates (UAE)

An ‘Offshore Company’ is a type of legal business entity available for businesses looking to establish in the UAE with the intention of either operating outside the UAE or for the purposes of acting as a holding company (for example, for the purposes of holding Real Estate, Intellectual Property Rights, Shares in other Operating Businesses or other Financial Investments).

Offshore Companies are a relatively inexpensive structure (in comparison to the other types of legal entities available in the UAE) that are attractive for foreign investors to form entities for the purposes of holding Capital or Assets, both within or outside the UAE, or conducting business outside the UAE.

Whilst Offshore Companies may differ to a degree depending upon the corporate law in the relevant jurisdiction or Free Trade Zone in which they are incorporated in the UAE, the main advantages of setting up a UAE offshore company are as follows:

  1. Offshore companies are, broadly, not subject to Corporate Income Tax in the UAE;
  2. They promote business flexibility and anonymity at a lower comparative cost (for instance, there are no requirements to maintain office space for an Offshore Company);
  3. They provide asset protection for Real Estate purchased in the UAE.

The two principal jurisdictions offering Offshore Companies in the UAE are Jebel Ali Free Zone (JAFZA) and the Ras Al Khaimah (RAK).

Both jurisdictions are “Tax Free” jurisdictions that levy no UAE income tax or UAE corporate tax on companies operating within the jurisdiction, allow 100% foreign ownership and enable registered businesses to open multiple currency accounts in the UAE and carry out business internationally.

Note that conducting business with a person resident in the UAE and having a physical presence within the UAE (other than interactions that are considered of a holding company / subsidiary nature) are not allowed.

Offshore Companies must appoint an approved registered Agent.

JAFZA Offshore Company Incorporation

The JAFZA was created in 1985. It is an industrial area surrounding the Jebel Ali Port, one of the world’s biggest shipping ports, which allows international companies based there to enjoy the special privileges of the free zone. These include exemption from corporate tax for 15 years, no personal income tax, no import or export duties, no restriction on currency, and easy labour recruitment.

Jebel Ali is located just outside Dubai and is about an hour’s drive from Abu Dhabi, the UAE’s capital city. Al Maktoum International Airport, which is planned to be the largest airport in the world in both freight and passenger volume, is constructed just outside the port area.

The Jebel Ali Free Zone Authority (JAFZA), in conjunction with the Dubai Government, introduced the Offshore Company in 2003 under the Jebel Ali Free Zone Offshore Companies Regulations 2003, and recently JAFZA has issued its new JAFZA Offshore Companies Regulations 2018 (‘New Regulations” to replace the previous regulations for the Offshore Companies.

Key features of a JAFZA Offshore Company:

  • Shareholders– A minimum of one shareholder is required, and corporate shareholders are permitted. International corporate shareholders are required to have all company documents attested;
  • Directors– A minimum of one director is required; details of directors are not available on the public register.
  • Secretary – Every company must have a secretary. A company director may also act as a company secretary;
  • Share Capital – No minimum share capital requirements;
  • Annual Reporting – Every company must keep an accounting record, and the company must appoint an approved auditor.

Key benefits of offshore company registration in JAFZA:

  • 100% Foreign Ownership– The JAFZA Offshore Companies Regulations require no local shareholding;
  • Local Real Estate Ownership – The JAFZA Offshore Company is permitted to directly own local Dubai real estate. Most properties in Dubai can be owned by JAFZA offshore companies, but both Free Zone and developer approval are required;
  • Shares in Local Companies– Despite a general prohibition on Offshore Companies conducting business with persons resident in the UAE, the authorities do allow Offshore Companies to hold the shares of both Free Zone and Onshore (LLC) Companies.
  • Local Bank Account– An Offshore Company can hold multi-currency bank accounts in the UAE to carry out routine international transactions;
  • Shareholder/Director details – The names of shareholders and directors do not have to be disclosed on a public register;
  • Inspection – The registrar has the right to inspect or appoint inspectors to examine the affairs of an Offshore Company.

UAE Offshore Companies should not be confused with UAE Free Zone Companies. Free Zone Companies are onshore entities permitted to carry out business in Dubai with certain restrictions. They are similarly subject to the 0% rate of UAE corporate tax, but they enable their shareholders, directors, and employees to obtain residency in the UAE.

Offshore Company Formation – FAQs

  • How long will it take to register a UAE Offshore company?

A JAFZA Offshore company will take approximately 3 weeks to register.

  • Am I required to visit the UAE to register a UAE Offshore Company?

Yes, for a JAFZA Offshore Company, the shareholders and directors are required to sign in the presence of the authorities in Jebel Ali.

  • Is it possible to obtain a UAE residency visa through a UAE Offshore company?

With the new implementing regulations for a JAFZA Offshore Company, it is possible for a company that owns a property in a designated freehold area in the United Arab Emirates, but approval of such an application is subject to the Authority’s eligibility requirements.

  • Can an Offshore Company lease office space in the UAE?

No, however, each company must have a registered address and can use this address to receive mail and perform other secretarial services.

  • Can I convert an Offshore Company to an Onshore Free Zone Company?

Yes, a JAFZA Offshore Company can be converted to a Free Zone entity to be able to conduct business and trade in the U.A.E.

  • Am I required to have my bank account located in Dubai, or can I have an international account?

UAE offshore companies are typically incorporated to utilize the local banking services and 0% rate of tax. However, it is possible for these companies to have accounts elsewhere in the world.

Contact us if you have any further queries about the topic.

FTA WARNS BUSINESS OWNERS OVER VAT REFUND SCAM

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The UAE’s Federal Tax Authority has issued a warning to business owners to be wary of phishing emails from scammers. The new scam came to light after emails were sent to customers of local banks requesting their personal banking details so that their VAT refund can be processed. The Authority has revealed that some bank customers have received phishing emails “from unidentified sources impersonating banks and financial institutions and asking recipients to provide personal data” in order to help the businesses to recover the VAT refund from FTA. The personal data requested includes names, credit card numbers and bank account Personal Identification Numbers (PINs). The Authority emphasized that the VAT refund process can only be performed by logging into the secure online portal which is available to each VAT registered individual and business. The FTA added that the process is safely executed on the official portal by utilizing International Bank Account Number (IBAN) and that the system is under the authority of the Central Bank of the UAE. In November last year, ENBD issued a similar statement warning its customers to be careful of such requests made by fraudsters. The FTA has urged all business owners to remain vigilant and maintain confidentiality of their data. It is important that all business owners seek advice only from reliable service providers. Affiniax Partners has been providing Professional Services to its clients for over 25 years. We have a team of VAT specialists in the region who can assist you through the process. For more information, please contact us at mail@affiniax.com

PROCEDURE FOR VAT REFUND IN DUBAI – FOREIGN BUSINESSES

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The 6 months deadline for VAT Refund for Foreign businesses is expiring on 1 October 2019. The refund scheme for the calendar year 2018 started from 2 April 2019. For the calendar year 2019, the refund scheme will start from 1 March 2020 and will last till 31 August 2020. As a special exception, the above timeline does not apply to foreign businesses registered in GCC countries. Foreign Businesses must assess whether they fall under the criteria, and if they do, they can submit an application to the Federal Tax Authority (FTA) on a special form to claim a refund for any business-related UAE VAT incurred in the relevant periods. The FTA has defined the following criteria (among other parameters) for a foreign business to qualify for this scheme:
  1. No Place of Establishment or Fixed Establishment in the UAE
  2. Not a taxable person in the UAE
  3. Not carrying out business in the UAE (unless the customer applies RCM)
  4. Must be carrying on a business and registered for VAT in a foreign jurisdiction
  5. Minimum VAT amount claimable is AED 2,000
Some of the conditions where VAT is not refundable to foreign businesses are as follows:
  1. Input Tax is not recoverable as per FTA laws (e.g. non-business expenses)
  2. Foreign business is from a jurisdiction which does not provide similar refunds (except for GCC registered businesses)
  3. Non-Resident Tour Operators
Below are the list of countries where businesses may be eligible for this refund:
  • Austria
  • Bahrain
  • Belgium
  • Denmark
  • Finland
  • France
  • Kuwait
  • Iceland
  • Isle of Man
  • Lebanon – in certain circumstances
  • Luxembourg
  • Namibia – refunds only available for business goods that are exported and not for services consumed in the UAE.
  • Netherlands
  • New Zealand
  • Norway
  • Oman
  • Qatar
  • Saudi Arabia
  • South Africa – refunds only available for expenses relating to goods that are exported from a designated UAE port within 90 days and does not apply to services.
  • Sweden
  • UK
  • Zimbabwe
  • Switzerland
Affiniax Partners has a team of VAT specialists in the region who can assist you through the process. For more information, please contact us at mail@affiniax.com

TRANSFER PRICING AND UNITED ARAB EMIRATES

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Transfer Pricing (TP) is a practice that allows for pricing transactions internally within businesses and between companies that operate under common control or ownership, including cross border transactions. The United Arab Emirates (“UAE”) joined the OECD Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”) on 16 May 2018. Through joining the Inclusive Framework, the UAE has (for now) committed to implementing the following four BEPS minimum standards: Action 5: Countering Harmful Tax Practices More Effectively, Considering Transparency and Substance UAE Progress The implementation of VAT in the UAE as of 1 January 2018 (which requires taxpayers’ registration with the UAE’s Federal Tax Authority and in doing so, furnishing information to a central tax administration agency) has allowed the UAE to make progress in this regard. Action 6: Preventing the Granting of Treaty Benefits in Inappropriate Circumstances UAE Progress It remains to be seen what approach the UAE may adopt in this respect. Action 13: Transfer Pricing Documentation and Country-by-Country Reporting (“CbCR”) UAE Progress We do not yet have visibility as to whether the UAE will sign the CbCR MCAA or choose one of the other mechanisms for implementing CbCR. It is currently also unclear whether the UAE will adopt the OECD CbCR Model legislation or enact its own tailored legislation. Action 14: Making Dispute Resolution Mechanisms More Effective UAE Progress Other jurisdictions such as Singapore, Netherlands and Luxembourg have signed up to the MLI to implement the MAP-related changes rather than enter into a bilateral renegotiation of their existing DTAs. It remains to be seen on the official approach the UAE may adopt in this respect. Latest Developments During the second week of March 2019, European Union governments updated a blacklist of tax havens this week, adding the United Arab Emirates. Blacklisted states face stricter controls on transactions with the EU, although no sanctions have yet been agreed by EU states. Though, experts believe that such restrictions could include increased audit risks and denial of certain benefits. Abdulaziz al-Ghurair, the banking group’s chairman, told reporters during a banking conference in Dubai. “I’m sure in the near future this will be solved.” “Because we have chosen to be an international financial center, we have to comply with the world’s regulations …” Al-Ghurair said. “We had issues like this in the past and they’ve been solved.” Key Takeaways & opportunities Whilst the UAE has only become a member of the Inclusive Framework on 16 May 2018, the UAE has already been making strides into ensuring its compliance with the four BEPS minimum standards through its participation in various Conventions issued by OECD that are designed to facilitate the implementation of the four BEPS minimum standards. Further, the UAE has already in place in its domestic rule’s certain information collection mechanisms. As a next step, the UAE would need to review, update and put in place domestic legislation to comply with the minimum standards. With several transfer pricing regulations going to be introduced in MENA over the next few years, this should be viewed as an opportunity to introduce a structured intra-group pricing framework to align with investment strategies and overcoming risks by implementing technology solutions that align with existing business systems. A recent survey suggests that 82% of respondents agree that transfer pricing structures are under critical evaluation in the MENA region.

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