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UAE’s Tax-Free Allure Dims With New Corporate Profit Levy

  • Tax incentives will remain in place for free-zone entities
  • Levy-free regime had helped draw business to the Gulf nation
Downtown Dubai skyline with Burj Khalifa, at sunset.

Downtown Dubai skyline with Burj Khalifa, at sunset.

Photographer: Guiseppe Cacace/AFP/Getty 
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The United Arab Emirates will impose a federal levy on corporate earnings for the first time next year, as it dismantles a tax-free regime that’s made it a magnet for global business but drawn scrutiny over transparency. 

The measure comes as the UAE seeks to align itself with new international standards, particularly the move toward a global minimum tax on multinational corporations endorsed by the Group of 20 major economies last year. The ambitious plan aims to eventually set 15% as the base levy to stem international competition to offer more attractive rates.