Sharjah Imposes 20% Tax on Natural Resource Firms to Boost Revenue

Post by: Bandan Preet

Sharjah has announced a new 20% tax on companies involved in extracting and processing natural resources. This law was introduced by His Highness Dr. Sheikh Sultan bin Mohammed Al Qasimi, a member of the UAE Supreme Council and the Ruler of Sharjah. The tax will apply to both extractive businesses, which take resources directly from the earth, and non-extractive businesses, which process these resources.

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The new tax will be calculated based on the "tax base," which is the total value of assets, income, and activities that can be taxed. In simpler terms, the tax base is the amount of money a company makes or the value of the resources it handles.

However, some relief exists for companies that already pay direct taxes to the federal government. If a company is paying federal taxes, it will get a deduction when calculating the amount it owes under Sharjah's new tax rule. This means these companies will not have to pay taxes twice on the same income.
The introduction of this tax is expected to help Sharjah increase its revenue from natural resource activities. The money collected will likely be used to support public services and development projects in the emirate.

Natural resource taxes like this are common worldwide. Governments use them to earn money from valuable resources like oil, gas, and minerals. In Sharjah's case, the new law aims to create a fair and structured way to tax these resources while giving companies that already pay federal taxes a break.

This new policy shows that Sharjah is taking steps to manage its resources responsibly and support its economy's growth. For companies in the natural resource sector, it means adjusting their financial plans to follow the new tax rules while continuing their operations.

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