The Federal Tax Authority of the United Arab Emirates (‘UAE’) announced that effective from the financial years starting on or after 1 June 2023. Corporate tax will be levied on corporations and other entities’ net income or profit.
The Federal Tax Authority updated its website and published a poster summarizing the new corporate tax.
Legislative provisions affirming these features will soon follow.
There are 13 keys features:
- The UAE corporate tax will apply to all UAE businesses except for the extraction of natural resources, which will remain subject to the Emirate level corporate taxation.
- Foreign entities and individuals will be subject to corporate tax only if they conduct a trade or business in the UAE in an ongoing or regular manner.
- The UAE corporate tax will apply equally to all categories of profits and other net income reported in the financial statements
- Tax rates:
- 0% tax rate for taxable income up to AED 375,000 to support small businesses and startups
- 9% headline corporate tax rate for taxable income exceeding AED 375,000
- Individuals will not be subject to corporate tax on income from employment, real estate, investment in shares or other personal income not related to a UAE trade or businesses.
- No corporate tax will apply to foreign investors who do not carry-on business in UAE.
- Corporate tax will apply on the adjusted accounting net profit of the business.
- Free zone businesses that meet all requirements can continue to benefit from corporate tax incentives.
- No withholding tax will apply on domestic and cross border payments.
- No corporate tax will apply on capital gains and dividends received by a UAE business from its qualifying shareholdings.
- No corporate tax will apply on qualifying intragroup transactions and restructurings.
- Foreign tax will be allowed to be credited against UAE corporate tax payable.
- Generous loss transfer and utilization rules will be available to businesses.
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