Corporate Taxation in the UAE and Its Effects: A Systematic Literature Review
Author : Abid K and Dr. K Rajaselvi
Abstract :
Background: Corporations are considered dominant players that have profound influence on the economy. Till the implementation of federal corporate tax, UAE didn't levy taxes on the profits of corporations, except in some sectors including foreign bank branches and oil companies. The country replaced its non-tax policy to a 9% corporate tax imposed on taxable income above AED 375000 in order to diversify its government revenue and adhere to the global tax regime.
Objective: To synthesize the major findings of peer-reviewed journal articles, policy documents, and observational studies to study the impacts of corporate tax implementation in the UAE.
Method: The present study is based on systematic literature review methodology, where literature on corporate taxation in the UAE and its effects are analyzed comprehensively. The present systematic literature review has included six secondary researches and one primary research. The researcher retrieved 646 studies from online research databases [Google scholar (257), Web of Science (198), Scopus (118), and ProQuest (73)]. The review conforms to the Preferred Reporting items for Systematic Reviews and Meta-Analysis (PRISMA) guidelines.
Results: Studies have found that the corporate tax structure in the UAE is business friendly. One of the major factors that make the UAE's corporate tax structure less complicated is its tax rate. There is a negative association between corporate tax and inflation in the UAE economy. The corporate tax reduces Foreign Direct Investments (FDIs) and Gross Domestic Product (GDP) in the UAE economy. In the UAE, with the implementation of corporate taxation, one of the significant changes that occurred is the diversification of government's revenue sources.
Conclusion: The implementation of corporate tax in the UAE is regarded as a land mark in its economy. One of the major advantages of implementing corporate tax in the UAE is that the country can comply with international tax standards. A 9% corporate tax rate enabled the UAE to develop a business-friendly tax structure.
Keywords :
Corporate tax, the UAE, effects of corporate tax, effects.
