Does carbon tax implementation advance sustainable development in the United Arab Emirates? Perceptions of academics and professionals

• Carbon tax implementation increases firm profitability and global competitiveness through cost reduction. • Staff green skills are promoted with carbon tax. • Carbon tax helps firms meet stakeholders’ needs and society expectations. • Lack of clear regulation, lenient penalties for non-conformity, higher implementation costs, and resistance to shift to eco-friendly operations could impede carbon tax implementation in the UAE. • Sustainability is enhanced through its three main pillars: economic, environmental, and social. Combating climate change is crucial for entities to ensure long-term sustainability, protect their supply chains, and maintain the trust of environmentally conscious investors and consumers. The aim of this research is to examine the perceptions of professionals and academics regarding carbon tax implementation in the United Arab Emirates (UAE). We examine three main areas: the incentives driving carbon tax adoption among UAE firms, the challenges hindering its implementation, and the role of the carbon tax in advancing sustainable development. We used a quantitative approach to validate our assumptions, with a survey questionnaire administered to academics and professionals operating in the UAE, and performed principal component analysis. According to the results, most of the respondents agree that carbon tax implementation enhances firm profitability and global competitiveness through cost reduction. It promotes green skills among staff and helps firms meet stakeholders’ needs and society expectations. However, most of the respondents agree that the lack of clear regulation, lenient penalties for non-conformity, higher implementation costs, and resistance to shift to eco-friendly operations among some groups with vested interests could impede carbon tax implementation across the nation. Finally, results show that the carbon tax enhances sustainability through its three main pillars: economic, environmental, and social. The study contributes to the bounded empirical literature on carbon taxation in emerging economies and offers practical implications for policymakers and business leaders. It provides useful guidelines for promoting sustainability through the adoption of eco-friendly fiscal policies, a proven instrument for mitigating climate change.