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Diversifying income: Traditionally, the UAE—including RAK—relied heavily on oil revenues. As the economy diversifies, VAT helps provide a stable, non-oil source of income.
Funding infrastructure: Tax revenue funds roads, schools, hospitals, and public services that benefit residents and businesses.
Economic resilience: With uncertain oil prices, taxes help stabilize public budgets.
The UAE implemented VAT in 2018 in line with a GCC-wide agreement. Being part of this regional bloc, RAK follows suit to maintain economic and legal alignment.
VAT pushes more businesses to register officially, keep proper books, and operate transparently.
This helps in reducing informal or “shadow” economy practices.
VAT can act as a mild disincentive for unnecessary consumption, promoting more sustainable economic behavior.
Countries with proper tax systems are often seen as more credible by international investors and partners.
Tax records help foreign investors assess the health and structure of businesses in RAK.
Formed by two or more UAE national shareholders. The joint liability is based on individual shareholding. Foreign investors can’t open a partnership company.
It needs 2 to 50 shareholders to form an LLC. the maximum liability of each shareholder is their respective capital share. Since June 2021, the government has permitted 100% foreign ownership; so a local sponsor is not required.
It is a sole proprietorship business that needs one single owner. Foreign investors need a UAE national to become local service agents. However, the LSA has no right over the company’s share and ownership.
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