Is there UAE Corporate Tax on Natural Resources? (Oil, Gas, Minerals)

Taxes on Natural Resources?

Oil, natural gas, water, and deposits of sand and rocks are the primary natural resources in the UAE. The production and exploitation of these natural resources make up an important part of the UAE economy. Under the Constitution of the UAE, the natural resources belong to the Emirate where the resources are found.

Accordingly, any (share of) income from the extraction and exploitation of natural resources directly earned by the Government, or royalties and other fiscal levies raised by the Government from the extraction or production of natural resources by private sector companies will be outside the scope of the UAE Corporate Tax regime.

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The extraction and exploitation of natural resources is often done by companies that are wholly or partially privately owned under long-term concession agreements entered into with the respective Emirate Government. These contracts generally provide that the profits earned by such companies are subject to Emirate-level taxation.

Acknowledging the long-term nature of natural resource contracts and the often significant capital commitments made by the concession holders, the UAE Corporate Tax regime intends to exempt the income earned by companies engaged in the extraction and exploitation of natural resources that are subject to Emirate-level taxation. This exemption from UAE Corporate Tax will not extend to any suppliers, contractors or subcontractors used by the concession holder.

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Note: The information in this article is meant to provide an initial introduction to the proposed UAE Corporate Tax regime and not be used for individual or business decisions as it does not represent the final legislation by the Government. More information o the UAE Corporate Tax regime will be made available in due course.