(MENAFN) The International Monetary Fund (IMF) said that UAE government is planning a uniform corporate tax rate across its seven states in a bid to cut its on oil revenue, Reuters reported.
A new revenue source would help shield economy against a fall in oil prices and expand policy tools in the UAE where monetary policy is restricted because the dirham currency is pegged to the dollar.
However, Younis Al Khouri, undersecretary and director general at the UAE federal finance ministry, said the study was just a regular exercise, ruling out any new taxes planned for now.
UAE has been studying schemes to lower its fiscal dependence on volatile oil prices for the past few years and working on unifying the tax system, which is different in each emirate.
Currently, each emirate has its own corporate tax rate but in practice corporate tax is only enforced on foreign oil companies and banks and many companies are based in tax-free zones. Individuals do not pay income tax.
Applying a unified corporate tax would drastically shift strategy in emirates such as Dubai, which has used a low-tax profile and tax-free zones to attract firms and cement its position as the Gulf Arab trade and financial hub.