The United Arab Emirates(UAE) is the leading business hubs for emerging entrepreneurs and startup ventures. Over the years, the UAE government has upgraded its services to suit the business requirements of both Small and Medium Enterprises(SMEs) as well as Multinational companies. It has partnered with private service providers to create a productive business ecosystem which is vital for sustainable development.
The recent delisting of the UAE from European Union tax haven blacklist implies the willingness of the government to comply with the EU standards. It is beneficiary for the country as it encourages investors to invest in the business ventures directly and enables a small business to acquire adequate funding for its operations.
UAE removed from EU Blacklist
Tax havens allow wealthy individuals and larger companies to avoid paying their share of taxes. This scenario is leading to an imbalance in the economic growth of the country. Thereby to avoid such circumstances, the Europian Union has enlisted countries in a blacklist of non-cooperative jurisdiction for tax purposes. The blacklisting allows EU countries to apply defensive measures against the countries on the EU blacklist, which includes monitoring, imposing higher penalties, demanding additional documentation and disclosure of tax-related information.
The European Union now has officially removed the UAE from its tax haven blacklist. It is a sigh of relief for SME's as well as Multinational companies based in the emirates. Although the UAE still charges no corporate tax, it got delisted from the EU blacklist due to the implementation of its commitment to introduce substance requirement. The first EU blacklist was released in December 2017 with an agenda to enforce tax reforms which would eventually reduce tax frauds, avoidance and evasion.
The key highlights of the implications from tax reform are listed below:
- All UAE organisations should notify the Regulatory Authority for any activity in the country.
- Notification should also be if income is taxable outside UAE.
- It is mandatory to submit an Economic Substance Report to the Regulatory Authority.
What does it mean for Businesses?
The removal from EU blacklist has increased the country's trustability that will encourage investors for direct investment in the nation. With flexible laws for foreign ownership and improved taxation policies, investing in small businesses has become more accessible and profitable as well. Investors can now be more confident and benefit from the thriving opportunities that persist in the UAE due to technical advancement and availability of resources.
With the government’s business-friendly policies, company formation in the UAE has never been this easy! SMEs have been flourishing throughout the UAE and are the significant forefronts of the country's economy. Starting a new business venture can thus be a rewarding option. Emerging businesses will have high exposure to innovation and potential market growth. It is certainly the best time to start a new business, and we are here to help. If you are a business owner or an investor, contact us today for all your business setup requirements. We would be glad to provide assistance throughout your business journey!