UAE Central Bank Considers Tax And Regulatory Changes

by Lorys Charalambous, Tax-News.com, Cyprus

09 June 2004

The Governor of the UAE Central Bank has indicated that the bank’s board is currently considering a number of changes that will alter the complexion of the country’s banking industry by lifting certain restrictions on regional and international institutions.

One change that appears already decided however, is the levelling of the tax playing field between domestic and foreign banks. Speaking to the Khaleej Times, Sultan bin Nasser Al Suwaidi, the Governor of the UAE Central Bank revealed that “all banks operating in the country will pay the same rate of taxes, at whatever rate is finalised by the Board of Directors.”

Other key reforms may also see a change in the compulsory minimum capital adequacy level of Dh 40 million and the lifting of a restriction on the number of branches that can be operated in the UAE by regional and foreign banks, which federal law currently restricts to no more than eight branches each.

“All three issues are being discussed by the Board of Directors of the Central Bank. In the first stage, the permission for AGCC (Gulf Cooperation Council)banks to expand in the UAE will be granted under certain guidelines,” the governor explained in the report, adding:

“Prior to issuing of new licences to new foreign entrants, the regulations regarding branch expansion will be announced.”

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