In the Middle East region, there is a growing trend towards the implementation of fiscal reforms. The United Arab Emirates (UAE) has adopted several key regulations in this area:
• Special Taxes: Implemented in October 2017.
• VAT: Introduced in January 2018.
• Economic substance regulations: Effective as of April 2019.
• Country-by-Country (CbC) reports: Also established in April 2019.
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In 2022, corporate tax was introduced in the UAE, applicable to tax years beginning on or after June 1, 2023. This tax is national in scope and applies to all business and commercial activities, with some specific exceptions.
The IS regime includes rules on transfer pricing and documentation requirements. The administration, collection and application of corporate income taxes are carried out by the Federal Tax Authority (FTA).

Economic Substance Regulations

On April 30, 2019, the Ministry of Finance of the United Arab Emirates (MoF) issued economic substance regulations (“Regulations”). These were replaced by new regulations issued on September 1, 2020, which establish the obligation for certain legal entities and unincorporated companies carrying out relevant activities in the UAE (“UAE licensees”) to maintain an adequate “economic presence” in the country in connection with their activities.
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Although UAE entities operating in free zones must meet economic substance requirements under certain conditions, the impact of the proposed UAE corporate tax regime on these requirements is not yet clear, especially in relation to entities subject to IS at a rate of 9%.
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For more information, see the economic substance requirements in the “Other Issues” section.