UAE continues to see growth in non-oil economy

The UAE’s economy is expected to grow by 3% this year and 4% in 2024, driven by strong growth in its non-oil sector, according to a new report.

S&P analysts said that the rising number of tourist arrivals, supportive government initiatives and increasing tech advancements are expected to drive the country’s economic expansion.

Trevor Cullinan, sovereign ratings analyst at S&P, said that sectors that will contributor most to the country’s economic growth in 2024 include wholesale trade, industry, real estate, construction, financial services and tourism, as well as oil and gas.

The S&P report said that the government’s economic and social measures implemented over the past two years “are strategically designed to set the stage for sustained, long-term economic expansion”.

It said: “The country’s ability to host major international events is expected to play a pivotal role in achieving the UAE’s ambitious goal of attracting 40 million visitors by 2030, accompanied by plans to expand the number of hotel rooms to 250,000 during the same period.”

The economic growth forecast matches projections from the UAE Central Bank, which expects the country’s economy to expand by 3.3% this year.

Business activity in the non-oil private sector economy of the UAE remained strong in August, with output and numbers of new orders increasing.

The seasonally adjusted S&P Global purchasing managers’ index reading of the region’s second-largest economy fell slighty to 55 in August, from 56 in July. An index score of above 50 represents growth, while one below that mark indicates a contraction.

Over the next 12 months the UAE’s non-oil sector “will be bolstered by an increasing number of tourists, as well as positive sentiment from investors, consumers and the private sector”, S&P said.

The UAE’s tourism sector is expected to continue growing as it hosts major global events such as the Cop28 climate summit in November, said Tatiana Lysenko, lead economist for emerging markets at the analyst firm.

Abu Dhabi and Dubai will remain at the forefront of attracting business and tourism to the country.

Dubai’s real estate sector is also expected to show “greater flexibility” with expectations for housing prices to stabilise in light of strong demand, S&P said.

The UAE’s banking sector is also expected to remain robust, with profitability improving beyond pre-pandemic levels due to rising interest rates, according to Mohamed Damak, senior director and global head of Islamic finance at S&P.

Profits of the four largest banks in the UAE grew sharply in the first half of this year, boosted by rising interest rates and the strong growth momentum, Moody’s Investors Service said in its August report.

First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank and Dubai Islamic Bank reported a combined net profit of $7.4 billion, up from $4.4 billion for the same period of 2022, the rating agency said.

Like banks and other lenders across the region, the four are benefitting from higher interest rates amid relatively lower inflation.

 

Firms urged to register for Corporate Tax

The UAE’s Federal Tax Authority (FTA) is urging to private businesses to register for the UAE Corporate Tax, which was launched in June

The FTA wants all corporate entities with their financial year from June to end May to have all their paperwork processing done as soon as possible.

These companies will have until February 2025 to pay their corporate tax obligations for the current financial year.

Registration can be done through the EmaraTax portal on the FTA’s website.

“The corporate tax registration process can be done in four clear and simple steps, taking no longer than 30 minutes,” says the FTA.

Entities that are already registered for VAT and excise tax can log in to their tax account on the EmaraTax portal. They will then need to select the ‘taxable person’, select the option to register for corporate tax and proceed with filling the registration form and providing documentation.

Once the application is approved, a Tax Registration Number for corporate tax will be issued.

The FTA said taxpayers who are not registered for VAT or Excise tax will need to create a new User Profile in EmaraTax using the link ‘eservices.tax.gov.ae’ and create an account using their email ID and phone number.