The UAE has been attracting international investors with ease due to the Emirate’s simplified business registration, accounting, and tax systems. Based on this ease of operating, the TMF Group’s inaugural Financial Complexity Index 2017 has revealed that the UAE is the third least complex jurisdiction in the world for accounting and tax compliance. The Financial Complexity Index which was ranked using key metrics such as the accounting, tax rules, and regulations in different jurisdictions, and risks associated with non-compliance in these areas, showed that all the five least complex jurisdictions in the Index have simplified reporting requirements and beneficial tax rates to encourage investment.
The UAE placed third after the British Virgin Islands (first) and Cayman Islands (second) as a nil-tax haven with zero per cent tax, no personal tax and no limits on repatriation of capital or profits. Statistically, UAE secured 92 points compared to 94 by the British Virgin Islands and 93 by the Cayman Islands. At seven per cent, the UAE rates as the least complex jurisdiction globally for ‘tax’. Curacao (eight per cent) is least complex for ‘reporting’, Cayman Islands (27 per cent) for ‘bookkeeping’ and it’s also the least complex jurisdiction for ‘compliance’ at 32 per cent.
With this report, it is expected that foreign investment in the Emirate will grow and continue to flourish, however, the implementation of Value Added Tax (VAT) will have a tendency of changing the dynamics as it comes along with increase accounting complexity for businesses.