(Bloomberg) -- Dubai's benchmark stock index fell the most in the Middle East a day after the United Arab Emirates unveiled plans to tax corporate earnings from next year.
The Dubai Financial Market General index dropped as much as 1.3%, making it the worst performer among emerging markets, with Emirates NBD Bank PJSC and Emaar Properties PJSC leading losses. Abu Dhabi's benchmark stock index also declined before turning positive.
The UAE, of which Dubai is part, plans to tax corporate earnings from June next year. The news is “clearly negative” for equities, said Hasnain Malik, head of research at Tellimer. Shareholders in publicly listed companies are among those likely to feel the impact of the tax because of the transfer of value to the government, he wrote in a note.
While the plan will broaden the government's income base, Moody's Investors Service warned the new levy would negatively affect the credit profiles of companies operating in the Middle East business hub.
Citigroup Inc. analysts said Dubai Islamic Bank PJSC, Abu Dhabi Commercial Bank PJSC and Abu Dhabi National Oil Company for Distribution PJSC were most likely to be affected by the new taxes.
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