The UAE currently has no system of federal income taxation. Instead, most of the emirates – including Abu Dhabi – enacted their own corporate tax decrees in the 1960s. These emirate-level decrees are of general application and remain in force as amended. In practice, however, corporate income tax is only enforced on oil and gas companies engaged in upstream activities, certain petrochemicals firms and, under separate banking tax decrees, branches of foreign banks. Entities established within free trade zones (FTZs) are subject to the rules, regulations and tax regime of that FTZ, as well as applicable federal tax regulations such as value-added tax. FTZs generally offer companies and branches a complete exemption from all emirate-level taxes or a 0% tax rate. The length of these tax holidays typically ranges from 15 to 50 years from the date that the entity registers with the FTZ, with a possibility of renewal upon expiry.
This chapter contains a viewpoint from Mark Schofield, Partner, PwC Middle East Tax & Legal Services Leader.