General Information

Except for VAT and corporate tax on oil and gas companies, and branches of foreign banks, the UAE does not impose corporate tax on businesses registered onshore. However, several transparency initiatives implemented recently in the country, related to the OECD’s BEPS project, and international exchange of information, could have material impact on business operations (i.e. Economic Substance Rules). 

Notable tax developments – Direct and indirect

(e.g. payment deferrals, rate reductions)

  • On 26th August 2020, Cabinet Resolution No. 44 of 2020 amended country-by-country (CbC) reporting rules in the United Arab Emirates (UAE), specifically the definition of “reporting entity” to identify the ultimate parent entity of an MNE group (tax resident in the UAE) is the only entity of the MNE group required to comply with CbC reporting obligations.
  • Additionally, on 28 August 2020, the UAE Ministry of Economy published Cabinet Resolution No. 58 of 2020 (the Decision) on the “Regulation of Procedures Related to Real Beneficiaries”. The Decision requires companies based on the UAE mainland and in commercial free zones to maintain registers of their beneficial owners and shareholders. Further, the decision also requires companies to file their registers with the relevant registrar and licensing authorities.
  • The Federal Tax Authority (FTA) released Public Clarification VATP020 “VAT-free special offers” to remind taxpayers of their obligations under the UAE’s VAT legislation, where goods or services are sold under certain promotional schemes. Retailers may often advertise promotions where the price for goods or services is discounted by the equivalent of the amount of VAT that would ordinarily be charged as offers that are “VAT free” or “the VAT is on us”.
  • Further, Public Clarification VATP021 “VAT registration of sole establishments” provides clarity on the VAT registration obligations of natural persons operating a number of sole establishments. Sole establishments are businesses owned and operated by natural persons and are not legally distinct from their owners. Where a natural person owns a number of sole establishments, the sole establishments are not required to be registered separately for VAT. The FTA has clarified that a single VAT registration in the name of the owner should be obtained.
  • On 22 October 2020, the UAE Ministry of Finance (MoF) published templates for filing notifications and reports under the UAE Economic Substance (ES) Regulations. Pursuant to release of the new UAE ES Regulations, all UAE businesses (including those that had earlier filed the ES notifications by 30 June 2020) are now required to file (or re-file, as the case may be) notification through the MoF’s dedicated portal. While the ESR portal is yet to be launched, the MoF has published templates for re-filing such notification and the ES report required to be filed within 12 months following the end of the licensee’s financial year (first report due by 31 December 2020 for the financial year ended 31 December 2019).

Employment-related measures

(e.g. state compensation schemes, training)

  • Dubai free zones have relaxed regulations around the transfer of employees between different entities to give employers an alternative to a temporary lay-off and maintain workers’ employment
  • Employers are also permitted to implement the following measures in the DIFC free zone:

—Reduced working hours

—Imposed vacation

—Imposed unpaid leave

—Temporary remuneration reduction

—Restricted workplace access

—Remote working requirements

—Extended residency visas where employees are made redundant

  • In addition, the DIFC is maintaining a “DIFC available employee database” of all employee terminations since 01/03
  • Sick leave for Covid-19 has special requirements in the DIFC, and is not considered towards an employee’s sick leave balance
  • Further, Emirates Airlines announced that staff salaries will be returned to 100% from October, despite layoffs in July


Economic stimulus measures

(e.g. loans, moratorium on debt repayments)

  • The UAE government announced USD 70 billion stimulus package, representing approximately 20% of GDP. Key highlights include:

—The Central Bank of the UAE (CBUAE) reduced policy interest rate twice by a combined 125 basis points so far this year

—Waiver of all payment service fees charged by the CBUAE for six months

—Reduction in reserve requirements to 7%

—Zero-interest-rate loans to banks (collateralized)

—Use of excess capital buffers

—Increase of loan-to-value ratio for first-time home buyers by 5%

—Limits on bank fees for SMEs

—Raising the limit on banks' exposure to the real estate sector from 20 to 30% of risk-weighted assets

—Relaxation of the Net Stable Funding Ratio and the Advances to Stable Resources Ratio

  • Another USD 7.2 billion fiscal package included

—Reduction in government fees

—Acceleration of infrastructure projects

—Water and electricity subsidies

—Credit guarantees and liquidity support

—Rebate on commercial lease payments in the tourism/hospitality sector

Measures to ease the lockdown


 Internal flights   Back to school 
UAE residents and tourists will be allowed to fly to Ras Al Khaimah without prior approval from 15 October Over a million students have returned to schools across the UAE with strict measures in place to control the spread of the virus
However, a negative Covid-19 certificate from a swab test taken no more than 96 hours before the flight to Ras Al Khaimah International Airport needs to be presented Pupils have opted for a blend of remote and in-class lessons: while evaluations of schools’ digital capabilities are positive (see the ‘Adapt and rethink’ section of this newsletter), the consensus among teachers and pupils is that there is no substitute for in-class learning
Emirates Airlines continues to increase its capacity, with flights operating in over 80 destinations and an expected return to all 143 destinations by the summer of 2021  

Other measures


Distance learning evaluation for schools E-participation
Results of the Knowledge and Human Development Authority's (KHDA) Distance Learning Evaluation (DLE) have shown that out of 209 schools in Dubai, 67percent were offering 'developed' e-learning programs The government has launched a project entitled “Designing the Next Fifty Years Project in the UAE”.
Out of 173 schools in Abu Dhabi, 146 were found to offer 'developed' e-learning programs, according to the Abu Dhabi Department of Education and Knowledge (ADEK) The project, inaugurated on September 29 by the Prime Minister and ruler of Dubai aims to involve the community in drafting a development plan for the country
Emirates Airlines continues to increase its capacity, with flights operating in over 80 destinations and an expected return to all 143 destinations by the summer of 2021 The new ideation platform enables contributors to enter ideas into one of sixteen ‘design fields’ such as Education, Housing and Youth including upload of a business-case document and a short description of the initiative
  The project coincides with reports that the official government portal has witnessed a 50% increase in visitors in H1 2020 as culture in the UAE and globally moves to more online forms of participation

Testing and inspection measures

Continuing inspections

  • Intensive field inspections continue in Dubai led by the Commercial Compliance & Consumer Protection (CCCP) department of the Department of Economic Development (DED).
  • In addition, the DED has encouraged consumers and business to report non-compliance with the precautionary guidelines and is employing technology in the form of the Dubai Consumer app to extend the reach of its compliance monitoring.
  • The latest round of field inspections has recorded 750 compliant establishments with no fines being issued.


Test requirements to fly

  • A PCR test is no longer mandatory for Dubai residents and tourists from over 50 countries when flying with Emirates Airline.
  • The key timeframe appears to be 96 hours: the test must be taken 96 hours prior to departure.
  • The airline only accepts PCR tests, not antibody or home testing kits.


Drive-through testing

  • To maximize efficiency and safety, drive through testing has become popular in Abu Dhabi.
  • Mubadala Healthcare has sponsored the building of the latest facility at Al Jazira Sports Club in support of the government’s policy of high-volume testing to minimize the spread of Covid-19.


Sniffer dogs

  • Abu Dhabi and Sharjah have joined Dubai airport in the deployment of sniffer dogs to detect the virus.
  • Experiments carried out in the UAE relied on high-speed sampling from the armpits of presumed cases.
  • Samples are then sniffed out by the dogs without coming in contact with the persons, and the results are revealed on the spot.
  • Data and studies showed that the detection of suspected Covid-19 cases achieved an accuracy rate of 92%.

Steps to adopt a new reality

New sustainability commitment

  • Dubai is studying the reduction of emissions during the Covid-19 movement restrictions, to create a baseline for future curbs on greenhouse gases.
  • On the back of its 22% reduction in emissions in 2019 and the decreases in nitrous oxide and other fumes due to the Covid-19 lockdown, the Emirate is investigating the possibility of ramping up its environment strategy.
  • The study has also helped the Dubai Electricity and Water Authority (DEWA) to reduce the need for polluting modes of transport and energy consumption and avoid a return to them in a post-Covid-19 world.

New standards in social care

  • Perhaps as a result of awareness of the impact on mental health the continued pandemic and lockdown is having on citizens globally, the Department of Community Development in Abu Dhabi has run workshops to collaboratively develop standards for licensing of social care professionals in the Emirate.
  • The government entity seeks to bring in social care services regulations for identifying those in need of social support, along with policies and standards for social care professionals and facilities.
  • Regulators, universities and (social) care providers were engaged in workshops that also encompassed entities from Dubai and Sharjah.
  • Continuing on our report on the knowledge economy in the UAE, Education sector involvement was considered especially critical to facilitate compatibility between the education and training provided and requirements of any licensing generated in the programme.

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