The United Arab Emirates announced earlier this year that starting from 2023, a corporate tax of 9% will be imposed as the country wants to align itself with the new international standards. Authorities said that the business community has been able to accept and understand the new rules and regulations regarding corporate tax.
However, there is always a chance of tax violations, and the United Arab Emirates has doubled its tax inspections in the first half of the year. The UAE’s federal tax authority carried out 9,948 inspection visits during the first half of 2020 and increased the percentage of inspections by 104% over the same time period in the year 2021. According to a press release, during the investigations, $35.50 million in tax liabilities were found by the authorities. This included a large number of tobacco products that did not bear the digital tax stamp of the country.
Why is it important?
In order to increase revenue and compliance, the UAE is making significant reforms to its tax structure. In April, UAE’s federal tax authority introduced a whistleblower program for tax evasion and violations. Under this program, individuals can report tax evasion cases and tax-related fraud to the tax authorities of the UAE. The aim of this whistleblower program is to enhance transparency and create tax awareness among the public. At the start of the year 2022, the Emirates announced that it would impose its first-ever tax on corporate profits in 2023. The decision was made because the Emirates wants to rely less on oil for its government’s revenue and wants to improve its financial transparency.
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