Commencing on June 1, 2023, a 9% Corporate Tax will be implemented in the UAE for businesses whose profits exceed AED 375,000, with Corporate tax exemption granted to free zone businesses. Are you prepared for the corporate tax implications in the UAE? Meticulously crafted taxation services are offered by us, the premier corporate tax service provider in the UAE, through accredited tax agents.
What constitutes Corporate Tax in the UAE? The implementation of Corporate Tax is scheduled to become effective from June 1, 2023, with a standard rate of 9% applicable to businesses earning above AED 375,000. The UAE’s corporate tax legislation incorporates advanced taxation methodologies aimed at fostering economic development, facilitating compliance with international standards, and mitigating illicit tax activities.
The Corporate Tax Rates that are applicable to businesses in the UAE are outlined as follows:
- Taxable income up to AED 375,000 is subjected to a 0% corporate tax rate.
- Taxable income exceeding AED 375,000 incurs a 9% corporate tax rate.
Multinational corporations, which are subject to OECD Base Erosion and Profit-Sharing laws falling under Pillar 2 of the BEPS 2.0 framework, and have combined worldwide revenues exceeding AED 3.15 billion, are faced with a 15% corporate tax rate.
Income Tax DubaiÂ
Income tax Dubai or comparable private taxes are not imposed, and there are no plans for their implementation, as confirmed by the authorities. Regardless of how income is earned—whether through stocks, rental income, or cryptocurrency trading—no taxes are levied, as the tax rate is 0%. All private income in the UAE is entirely tax-free, provided a UAE Residence Visa is held and an official place of residence outside the UAE is no longer maintained.
At the Federal level, Corporate Tax is presently not imposed in the UAE. However, within the Dubai taxation framework, Corporate Tax (CT) is levied on oil and gas companies and branches of foreign banks at an Emirate level. Each Free Zone in the UAE operates under its own set of regulations, with companies incorporated within them exempted from corporate tax. Dubai Income Tax is scheduled to be introduced by the UAE beginning June 1, 2023, at a rate of 9% for incomes exceeding AED 375,000. The administration, collection, and enforcement of UAE CT will be overseen by the Federal Tax Authority. UAE Corporate Tax will be applicable to all businesses and commercial activities in the UAE, with certain exceptions.
Corporate Tax Definition
Corporate Tax, known as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions, is a direct tax imposed on the net income of corporations and other businesses.
The implementation of Federal Corporate Tax, effective from June 1, 2023, for financial years beginning on or after that date, has been initiated by the UAE through the introduction of the “Corporate Tax Law” (Federal Decree-Law No. 47 of 2022). This step is aimed at enhancing the UAE’s strategic objectives and promoting its development by establishing a competitive Corporate Tax system aligned with international standards. Drawing from global best practices, the UAE’s Corporate Tax regime is founded on internationally recognized principles, ensuring transparency and a comprehensive understanding of its implications.
Contact Information:
External Audit Department
Office No. AM06, Saraya Avenue Building, Al Garhoud
Dubai, UAE