Experts see no reduction in FDI inflows to the UAE despite the corporate tax regime | Daily News Byte

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Investment experts say the UAE will continue to channel FDI capital into the region as investors prefer the emirate for its business-friendly policies, excellent infrastructure and structural changes aimed at diversifying the economy.

The UAE, which has seen FDI growth of 116 per cent over the past 10 years, will remain a key global hub for FDI regardless of the introduction of a nine per cent corporate tax (CT) as it continues to maintain its global competitiveness and attractiveness as a business destination on the basis of a series of investor-friendly reforms.

Fincasa Capital, a global financial services and tax advisory company, said on Wednesday that it sees no slowdown in investment in the country despite the new tax structure.

Waris Syed, founder of Fincasa Capital, said the CT would be a boon to the UAE economy as it would provide the government with a new source of revenue and, in effect, help reduce its heavy reliance on oil revenues.

“We expect the new tax regime to strengthen investor confidence in the growth prospects of the national economy, seeing the government’s willingness to implement changes that are vital to the globalization of local business culture and to make the country a pioneer internationally.”

Investment experts say the UAE will continue to channel FDI capital into the region as investors prefer the emirate for its business-friendly policies, excellent infrastructure and structural changes aimed at diversifying the economy.

Garbis Iradian, chief economist at the Institute of International Finance, said the UAE, which remains the largest recipient of FDI in the Mena region with inflows of $22 billion in 2022, representing 4.3 percent of its gross domestic product, will continue to encourage inflows capital to the region.

FDI inflows into the Middle East, North Africa and Pakistan (MENAP) region are set to reach $56 billion in 2022 and $66 billion in 2023 as the UAE witnesses increased FDI, driven by a friendly business environment, excellent infrastructure, predictable policies, and structural changes aimed at diversifying the economy and creating a dynamic and expanded private sector, Iradijan said.

According to Hatem El Safti, CEO of Business Link, the UAE will attract a large share of the $66 billion potential FDI inflows to the Middle East, North Africa and Pakistan (MENAP) in 2023, as global investors see the emirate as an ideal investment destination.

Syed said the move will not only help make the UAE more ready for a post-oil world, but also allow the country to move closer to its goal of becoming a leading nation in the next 50 years.

“At Fincasa Capital, we will provide all support to attract more international investors to come to the shores of the UAE and take advantage of the many opportunities here.

The introduction of CT on annual profits above Dh375,000 effective from June 2023 was the latest in a series of recent government reforms enacted to bring the UAE in line with the global tax regime. Investment and tax experts said the landmark move, which marks the nation’s transformation towards an advanced economy, is also in line with the UAE’s economic diversification efforts, as well as its commitment to improving the local business and investment landscape and attracting the best talent from around the world.

Tax experts say the motivation behind the introduction of the regime is to enable the UAE to remain a competitive and productive economy, as well as to continue to support and encourage growth.

“Additionally, the UAE wants to be flexible enough to respond to the changing international and domestic environment and tax developments.” The UAE intends to continue to attract foreign investment and provide security for both businesses and the tax administration. Furthermore, they aim to minimize the compliance burden for businesses,” they said.

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