How a country can function without taxes?

It is generally assumed that taxation is an inevitable aspect of any economy and that no state can exist without collecting taxes. The governments introduce the most various fees and taxes in order to replenish the state treasury. Money provided by taxation is used to reimburse expenditures for economic infrastructure, military, cultural, public and other areas.

At the same time, we know that the UAE is the tax-free state. Foreign banks and companies engaged in petrochemical industry are the only the entities liable to taxation. However, the UAE, being tax free country, undergoes rapid economic growth and fast overall development.

The Government of the UAE implements well-established and clear policy. The petroleum industry, being a foundation of the economic system of the country, serves as the crucial source of income. Tourism sector, logistics, industrial sector and other economic domains contribute to the diversification and sustainability of the UAE economy.

The UAE Federal Government and the governments of every single emirate aim at creating the most favourable conditions for carrying on a fast-growing and profitable business and allow the country to successfully function without taxes.

The main competitive advantages of the UAE include:

  • A well-established infrastructure. The UAE jurisdiction offers all the required facilities and utilities for carrying on business.
  • Advanced communication systems. Availability of various communications tools and techniques.
  • No taxation for business. All the types of business income are exempted from taxation.
  • Financial stability. A sustained economy with no currency exchange restrictions.
  • Free Trade Zones. Availability of the specialized economic areas, which provide the most attractive business environment and ensure complete compliance with the applicable legislation.

The UAE undergoes fast and stable development of all the economic domains. All these processes are well-thought-out and comply with the corresponding national strategies. After successful implementation of the Dubai Strategic Plan 2015, a new Dubai Strategic Plan 2021 was elaborated by the Government. The implementation of the new Plan has already been started and the goals that were set up meet the highest requirements.

The Abu Dhabi Economic Vision 2030, which is a roadmap for the Emirate’s economic progress, reflects the major goals of the Government of Abu Dhabi.

All these documents define a path of development of the UAE with its intentions to increase the volume of oil production, create the most advanced infrastructure and foster the overall economic growth without necessity to apply taxation. And the UAE, being located on the intersection of the major international trade routes, is right on the way to achieve these goals.

The UAE Central Bank plays an important role in strengthening the UAE financial stability. As of today, the UAE banking system comprise 23 local banks and 28 foreign banks, which are also locally licensed.

The UAE imposes no taxes to business. The state treasury is replenished by the lease of different premises to businesses, fees for obtaining licenses and other payments. Such financial policy of the state makes it possible to abolish direct taxation. The largest fraction of revenues comes from governmental sector, tourism sector and the related industries.

The UAE is the unique country that has managed to create a robust economy and offers the most attractive business environment with no taxation applicable.


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