In his capacity as Chairman of the Executive Council of Dubai, His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, and Deputy Prime Minister and Minister of Defence of the UAE, has issued Executive Council Resolution No. (101) of 2024, approving measures to flag foreign banks found to be in breach of administrative guidelines while operating in the emirate of Dubai and stipulating penalties for such violations.
Administrative violations and fines
The resolution specifies administrative violations and applicable fines for foreign banks. In addition, it aims to enhance compliance among banking sector institutions by establishing robust standards for responsible governance within the banking system. The resolution will be published in the Official Gazette and will be effective from the date of its publication.
Earlier this year, Dubai issued Law No. (1) of 2024 on taxation of foreign banks operating in Dubai. According to the law, foreign banks are subject to a 20 percent tax on their annual taxable income.
However, if these banks pay corporate tax in accordance with Federal Law No. (47) of 2022 on the Taxation of Corporations and Businesses and its amendments, the amount of corporate tax will be deducted from their total tax liability.
The Law applies to all foreign banks operating in Dubai, including special development zones and free zones, with the exception of foreign banks licensed to operate in the Dubai International Financial Center (DIFC).
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Banking sectors posts strong growth
Dubai continues to strengthen its regulatory and legal framework, further supporting the banking sector’s operating environment. Banks in Dubai and the UAEÂ continue to see healthy operating conditions and robust sector liquidity, driving a 9.5 percent expansion in the sector during the first 9 months of 2024, exceeding the full-year growth of 7.7 percent in 2023, according to Fitch Ratings.
A few Fitch-rated banks have exceeded 15 percent growth since the beginning of the year, including Abu Dhabi Islamic Bank, Emirates Islamic Bank and National Bank of Ras Al Khaimah.
