Dubai has introduced a new law requiring foreign banks operating in the emirate, except those in the Dubai International Financial Centre (DIFC), to pay a 20% annual tax on their income. This law also establishes guidelines for calculating taxable income and filing tax returns. Additionally, it regulates procedures for tax audits and sets penalties for non-compliance.
This move reflects the emirate’s growing focus on non-oil revenue streams. While the UAE remains a major oil producer, the government recognizes the importance of economic diversification to ensure long-term stability and growth. The 20% tax on foreign banks is expected to contribute significantly to this strategy.
However, a question remains why only foreign banks should be taxed and not also local, UAE banks who will thus have a huge competitive advantage. Moreover, it remains to be seen how many/whether any foreign bank will pull out from the UAE for this reason, if so, it could possibly damage reputation and competitiveness of the banking sector.
We are a corporate service provider (CSP) based in Dubai, can help you to set up your business in Dubai and assist with opening a bank account for your company in any bank in the UAE. Please write or call us for further information: office@alphaprimedwc.ae / +971 58 515 2374.
