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

  • On 26 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

  • 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, various employers across the UAE are encouraging employees to receive vaccination in the hope that people will feel less insecure and resume their normal responsibilities with fewer restrictions

Economic stimulus measures

  • The UAE government will extend its USD 70 billion stimulus package by six months starting from 01 Jan 2021. 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

  • About 46% progress has been achieved in implementing the 15 initiatives of the first phase of the economic recovery programmme

Measures to ease the lockdown


  • The UAE Ministry of Health (MoH) has approved the Chinese Sinopharm vaccine

  • The vaccine will be administered in two shots, 21 days apart.

  • The vaccine has 86% efficacy according to the MoH

Entertainment and tourism

  • The Abu Dhabi Crisis and Disaster Committee has announced that it is working with local authorities to resume all economic, tourism, cultural and entertainment activities in the emirate by 23/12.
  • This due date is an attempt to breathe life back into the dampened economy, which the IMG has projected will contract by 6.6% in 2020.

Other measures

Consumer protection and business continuity

  • The government established a dedicated task force to ensure smooth and uninterrupted supply of consumer goods and enforced strict monitoring standards to prevent manipulative pricing practices

  • The Ministry of Economy also set up an interactive online tool to help companies address the impact of COVID-19 by providing latest developments, precautionary measures for business continuity with suggestions on how to increase sales and overview of most “affected” vs "promising" sectors.

An agile government

  • Cabinet shake-up including a dedicated Minister of State for Digital Economy and AI, a cyber security chief and a committed Ministry of Industry and Advanced Technology to handle a more digitally-oriented economy

  • The UAE Cloud strategy involves access to Microsoft’s local Azure Cloud to meet SME data storage challenges in an economy averse to exporting data outside of the country

Testing and inspection measures

Continuing inspections

  • Hundreds of school buses transporting children across the emirate are being inspected daily to ensure the implementation of anti-Covid measures for the safety of children, according to authorities.

  • The Integrated Transport Centre (ITC) announced on Twitter that it was carrying out the inspections that included approximately 1,500 school buses operating in different schools in the emirate.

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

Relationship with Israel

  • The Middle East Peace Agreement (Abraham Agreements), signed over the summer, normalize relations between Israel and the UAE

  • Already, since August 2019, the Emirati company APEX National Investment and Israel's Tera Group have been partnering in research on COVID-19

  • There are expectations of direct flights and rumours of Israeli real-estate investment in Dubai, as well as a more general hope that the combination of Israeli tech hubs and UAE infrastructure will produce jobs, progress and a boost to both economies

Virtual Internships

  • Companies in the UAE are moving increasingly towards a new, digital reality.

  • Many have conducted internships entirely remotely with students over the last six months

  • In response, universities have also made changes, embracing ‘borderless recruitment’ and even introducing entire new courses for the digital world

  • Overall, the Institute of Student Employers (ISE) predicts a 14% rise in graduate opportunities in the UAE in 2021: a partial recovery after a 30% contraction in the market this year