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UAE Says it Seeks to Commit to Int’l Standards, Prevent Malicious Practices via Corporate Tax

The agreement of the UAE and Kuwait aims to encourage and facilitate cooperation in data and legislative regulations with the aim of enhancing the financial acumen of investors in both countries. Asharq Al-Awsat
The agreement of the UAE and Kuwait aims to encourage and facilitate cooperation in data and legislative regulations with the aim of enhancing the financial acumen of investors in both countries. Asharq Al-Awsat
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UAE Says it Seeks to Commit to Int’l Standards, Prevent Malicious Practices via Corporate Tax

The agreement of the UAE and Kuwait aims to encourage and facilitate cooperation in data and legislative regulations with the aim of enhancing the financial acumen of investors in both countries. Asharq Al-Awsat
The agreement of the UAE and Kuwait aims to encourage and facilitate cooperation in data and legislative regulations with the aim of enhancing the financial acumen of investors in both countries. Asharq Al-Awsat

Deputy Secretary of the Ministry of Finance Younis Al-Khoori said that the use of federal tax on companies as of June 2023 strengthens the UAE’s commitment to meet international standards for tax transparency and the prevention of harmful tax practices.

It is also an integral part in encouraging economic growth, attracting investment, and supporting fifty projects.

The total revenue collected from fees for services provided by the central government last year was 26 billion dirhams ($7 billion), while the value of revenues and amounts collected through e-dirham for 2021 was more than 14.33 billion dirhams ($3.9 billion), according to the Emirati official.

Commenting on the announcement of the introduction of the Central Corporate Tax, he explained that the announcement was a result of the Government strategy led by the Ministry of Finance to strengthen the state.

The purpose of the strategy is to reinforce the state’s commitment to meet international standards for tax transparency and the prevention of malicious tax practices, he continued.

Corporate taxation is based on international best practices that aim to strengthen the UAE’s position as a leading global hub for trade and investment, and to accelerate the country’s growth and strategic goals’ achievement.

In support of the state’s direction in improving and diversifying non-oil revenue sources, the corporate tax policy aims to diversify the state government’s revenue resources needed to create jobs, finance public spending, and improve capital infrastructure projects and the infrastructure for social services.

Al-Khoori added that corporate tax is an integral part of economic policies that support economic growth and attract investment, leading to the promotion of the country’s economic growth and support for fifty projects and other strategic goals.

He pointed out that the Finance Ministry had announced at the end of January 2022 that it would introduce a federal tax on business profits for the fiscal years beginning on or after June 1, 2023.

The corporate tax system used in the country is one of the most competitive in the world.

There the tax will be levied at a base rate of 9 percent and a profit of zero percent on taxable profits not exceeding 375,000 dirhams ($100,000) to support the SMEs.

Moreover, Boursa Kuwait and Kuwait Clearing Company signed a joint agreement of understanding with Abu Dhabi Securities Exchange (ADX) to standardize and define operational, administrative, and technical procedures.

The MoU also seeks to achieve effective cooperation with regards to listing, trading and joint central depository operations.

Under the terms of the agreement, the parties agreed to take necessary measures to encourage and facilitate cooperation in the areas of data exchange, the standardization of legislative regulations, and enhancing the financial acumen of investors in both countries.

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Firm Dollar Keeps Pound, Euro and Yen Under Pressure

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
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Firm Dollar Keeps Pound, Euro and Yen Under Pressure

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo

The US dollar charged ahead on Thursday, underpinned by rising Treasury yields, putting the yen, sterling and euro under pressure near multi-month lows amid the shifting threat of tariffs.

The focus for markets in 2025 has been on US President-elect Donald Trump's agenda as he steps back into the White House on Jan. 20, with analysts expecting his policies to both bolster growth and add to price pressures, according to Reuters.

CNN on Wednesday reported that Trump is considering declaring a national economic emergency to provide legal justification for a series of universal tariffs on allies and adversaries. On Monday, the Washington Post said Trump was looking at more nuanced tariffs, which he later denied.

Concerns that policies introduced by the Trump administration could reignite inflation has led bond yields higher, with the yield on the benchmark 10-year US Treasury note hitting 4.73% on Wednesday, its highest since April 25. It was at 4.6709% on Thursday.

"Trump's shifting narrative on tariffs has undoubtedly had an effect on USD. It seems this capriciousness is something markets will have to adapt to over the coming four years," said Kieran Williams, head of Asia FX at InTouch Capital Markets.

The bond market selloff has left the dollar standing tall and casting a shadow on the currency market.

Among the most affected was the pound, which was headed for its biggest three-day drop in nearly two years.

Sterling slid to $1.2239 on Thursday, its weakest since November 2023, even as British government bond yields hit multi-year highs.

Ordinarily, higher gilt yields would support the pound, but not in this case.

The sell-off in UK government bond markets resumed on Thursday, with 10-year and 30-year gilt yields jumping again in early trading, as confidence in Britain's fiscal outlook deteriorates.

"Such a simultaneous sell-off in currency and bonds is rather unusual for a G10 country," said Michael Pfister, FX analyst at Commerzbank.

"It seems to be the culmination of a development that began several months ago. The new Labour government's approval ratings are at record lows just a few months after the election, and business and consumer sentiment is severely depressed."

Sterling was last down about 0.69% at $1.2282.

The euro also eased, albeit less than the pound, to $1.0302, lurking close to the two-year low it hit last week as investors remain worried the single currency may fall to the key $1 mark this year due to tariff uncertainties.

The yen hovered near the key 160 per dollar mark that led to Tokyo intervening in the market last July, after it touched a near six-month low of 158.55 on Wednesday.

Though it strengthened a bit on the day and was last at 158.15 per dollar. That all left the dollar index, which measures the US currency against six other units, up 0.15% and at 109.18, just shy of the two-year high it touched last week.

Also in the mix were the Federal Reserve minutes of its December meeting, released on Wednesday, which showed the central bank flagged new inflation concerns and officials saw a rising risk the incoming administration's plans may slow economic growth and raise unemployment.

With US markets closed on Thursday, the spotlight will be on Friday's payrolls report as investors parse through data to gauge when the Fed will next cut rates.