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S&P Global Ratings said the new tax on corporate profits would help the UAE move away from the oil business and support the smaller emirates that make up the Gulf states.
Standard & Poor’s said in a report on Monday that if the federal government used tax revenue for capital investment across the UAE, it would indirectly support economic activity in individual emirates.
Trevor Cullinan, credit analyst at S&P, said: “The expansion of the government’s revenue base should support the smaller emirate’s economy, however, the full impact is unclear as it is unclear how the tax will be distributed. .”
The tax could put pressure on banks, businesses and insurers, “but it will be manageable and not significantly affect their creditworthiness,” he said.
The UAE plans to introduce a 9% corporate tax from June 2023.
Dubai Islamic Bank is one of the city’s largest lenders and the country is expected to remain competitive after the tax comes into effect.
Last week, Fitch Ratings said the tax could have an “uneven credit impact” on companies. The company expects an increase in the attractiveness of UAE free zones, which operate under special rules and will continue to be exempt from the new tax.
Dubai has the largest number of free zones in the country, including an airport and an international financial center.
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