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Income tax ‘not on the table’ says UAE minister

UAE economy minister Abdulla Bin Touq Al Marri speaking at Davos, where he said UAE income tax 'is not coming anytime soon' Wam
UAE economy minister Abdulla Bin Touq Al Marri speaking at Davos, where he said UAE income tax 'is not coming anytime soon'
  • Al Marri dismisses speculation
  • EU financial blacklist criticised
  • $140bn invested in bloc

The UAE has no plans to introduce income tax, economy minister Abdulla bin Touq Al Marri has said, dismissing speculation the country was in discussions to end its traditional tax-free status.

Speaking at the World Economic Forum in Davos, the minister also criticised the EU for keeping the Gulf nation on its blacklist of countries with deficiencies in combating illicit financial flows.

The UAE introduced a corporate tax in 2023 to reduce reliance on oil revenue –amid GCC members’ adoption of OECD-backed Pillar 2 standards mandating a 15 percent corporate tax on multinational businesses – fuelling speculation about potential income tax reforms.

The Gulf state has long promoted its tax-free status as a key attraction.

“There’s a lot of speculation on that,” Al Marri said in an interview with Bloomberg at the annual Swiss gathering of political and economic leaders.

“[Income tax] is not on the table. It’s not in the rooms of discussions. It’s not being discussed in the meetings. It’s not coming anytime soon.”

Al Marri expressed frustration over the EU’s decision to keep the UAE on its blacklist, despite what he described as significant progress in enhancing financial transparency. 

The Paris-based Financial Action Task Force (FATF) – an intergovernmental organisation established to combat money laundering and terrorist financing – removed the UAE from its “grey list” last year after assessing its anti-money laundering and counter-terrorism financing systems.

The global body had placed the Gulf state under enhanced supervision in March 2022, citing weaknesses in systems to fight financial crime and combat the financing of terrorism.

The UAE’s removal from the international watchdog’s list in under two years is significant, as the timeframe is less than half the average duration for countries to achieve de-listing.

“The UAE managed to get off the grey list in record time, based on assessment and based on people who come on site and scrutinize your systems for weeks and months,” Al Marri said. 

“I do not understand how the UAE is still on the blacklist.”

While the UAE has been lobbying the EU to change its stance, Al Marri did not comment on whether the bloc was reconsidering its position.

Countries are regularly assessed by the EU for compliance with anti-money laundering and counter-terrorism financing regulations. 

Its blacklist includes nations deemed to have strategic deficiencies in their financial systems, which acts as a marker of heightened scrutiny and potential obstacles for investors.

At the same time, AGBI earlier reported that the EU has been intensifying efforts to attract investment from the UAE despite keeping the Emirates on its blacklist.

An EU delegation visited Abu Dhabi in June last year to promote the bloc’s Capital Markets Union plan.

The UAE is the EU’s top investment destination in the Middle East and North Africa, according to EU statistics. 

European entities have invested €163 billion ($175 billion) in the Emirates. The UAE’s investment in the EU is around $140 billion.

Bryan Stirewalt, Mena financial services regulatory leader at consultancy Ernst & Young, previously warned that multiple grey lists could cause problems.

“I think every country has a right to create its own grey list – but ‘the’ grey list belongs to FATF and should not devolve into regional grey lists,” he said.

Al Marri also criticised a proposed EU directive that could penalise imports from countries without trade union rights, saying it imposes unfair expectations on other nations’ labour systems.

“You can’t dictate what other countries do with their labour systems and management,” he said. “What works in the UAE works.”

The directive could pose challenges for the hydrocarbons sector, he said, at a time when the UAE is ramping up liquefied natural gas (LNG) exports to Europe. 

Although the UAE, an Opec member, exports little crude to the EU, according to Bloomberg data it is increasing LNG exports to the bloc. 

The criticism mirrors recent remarks from Qatar, a top LNG producer, which warned that EU climate directives could reduce its fuel shipments to Europe.

It is “really going to challenge” the oil and natural gas industries, he said.