Dubai mulls reducing government fees to increase economic competitiveness

Dubai's Department of Finance unveiled an initiative on Tuesday to review government fees and gradually reduce them to improve the ease of doing business in the emirate.

The Public Revenue Structuring Programme by the DOF will include a study of fees collected by all government entities, the Dubai Media Office said in a statement.

The move was announced after the UAE introduced a 9 per cent federal corporate tax on the profit of businesses from the financial year starting on or after June 1, 2023.

While the federal tax is among the lowest in the region, "the new reality requires us to study and review the government fees system, in order to help businesses and entrepreneurial projects", said Abdulrahman Al Saleh, director general of DOF.

"The fees imposed by the government of Dubai on commercial activities are affordable in the absence of corporate tax. Following the introduction of this tax, however, we will be keen, under the supervision of the General Secretariat of The Executive Council, to study those fees and look into the possibility of gradually reducing them in line with emergent trends."

Abu Dhabi and Dubai have cut some government fees over the past year to ease the financial strain on businesses during the pandemic to support small and medium size companies.

Dubai reduced or cancelled fees for 88 government entities last year, while Abu Dhabi cut business set-up fees by 94 per cent to Dh1,000.

Overall, the UAE introduced economic stimulus measures worth Dh388 billion ($105.65bn) to offset the effect of the pandemic that tipped the world economy into its worst recession since the 1930s.

The UAE's economy is expected to grow 4.6 per cent this year, up from an estimated 1.9 per cent in 2021, according to Emirates NBD.

The DOF's initiative will help the government to achieve revenue sustainability while supporting businesses. It reiterated that current corporate tax incentives made available to free zone companies in Dubai will continue.

The government is also working to develop "supportive and attractive policies" to attract foreign investments to the emirate, the DOF said.

Business conditions in the non-oil private sector economy of Dubai, the commercial and trading hub of the Middle East, were at their strongest level in two-and-a-half years in December, driven by a sharp increase in orders thanks to an Expo 2020 Dubai demand boost and an improvement in the tourism sector.

The emirate's gross domestic product at constant prices grew by 6.3 per cent annually in the first nine months of last year, helped by favourable government policies and supportive fiscal measures, according to official data.