Abu Dhabi will decrease the cost of starting a new firm by “more than 90%” in order to boost the emirate’s “competitiveness locally and internationally.” Authorities have stepped up efforts in recent weeks to entice new business to Abu Dhabi, one of the United Arab Emirates’ seven emirates. As the UAE attempts to diversify its historically oil-based economy, corporate taxes are essentially non-existent.
“Business setup costs in Abu Dhabi emirate have been slashed by more than 90% to AED1,000 ($272),” the Abu Dhabi Government Media Office announced late Sunday in a statement.
The new tariff would eliminate some taxes previously paid to various public organizations while reducing others, and it will take effect on Tuesday, July 27, the company said.
According to the statement, “the move would greatly improve the convenience of doing business in the emirate and raise Abu Dhabi’s competitiveness regionally and internationally.”
The United Arab Emirates is one of the “jurisdictions with no or minor taxes,” according to the Organisation for Economic Cooperation and Development.
The UAE, on the other hand, welcomed the historic agreement to restructure how multinational corporations are taxed on Monday, saying it backs the global consensus to tackle tax evasion and profit shifting.
More than 130 countries have previously agreed to international tax reforms, including a 15% corporate tax rate as a minimum.
“The UAE is fully committed to working collaboratively with the OECD and (inclusive framework) members to advance technical discussions so that a fair and sustainable outcome can be achieved,” said Saeed Rashid al-Yateem, assistant under-secretary at the finance ministry, in a statement carried by the official WAM news agency.
The United Arab Emirates has lately implemented a slew of economic changes.
Since June 1, foreigners have been able to establish firms and keep full control of their capital, which was previously only possible in specific free zones, with a limit of 49 percent outside those zones.
Abu Dhabi and Dubai, one of the other seven emirates, have long battled for the right to host global companies’ regional offices, luring hundreds of companies.
The Dubai administration proposed a number of measures in June that are expected to be implemented by mid-September, with the goal of lowering corporate costs and promoting economic growth.
Saudi Arabia, the Arab world’s largest economy, has emerged as a competitor to the Emirates’ pulling power in recent months as it strives to break free from its own oil dependence.
Saudi Arabia issued an ultimatum to foreign corporations in February, stating that they must establish regional headquarters in Riyadh by 2024 or risk losing lucrative government contracts.