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Corporate Tax in UAE

What is Corporate Tax?

The UAE Ministry of Finance introduced a Corporate Tax on business profits, effective June 1, 2023. This tax reform aims to promote small and medium enterprises by implementing an introductory statutory tax rate of 9% on corporate profits exceeding AED 375,000 ($102,000). In contrast, profits below that threshold will be exempt from taxation. Compliance with corporate tax regulations is mandatory for all applicable companies in the UAE, including filing annual tax returns and maintaining proper accounting records following the relevant laws and regulations.

The corporate Tax UAE was introduced to assist the UAE in achieving its strategic goals and hasten its growth and transition. With the UAE's vast network of double tax treaties, the assurance of a competitive corporate tax structure that complies with international norms would solidify the UAE's position as a top business and investment location. Given the UAE's status as a worldwide financial and economic center, the UAE Corporate Tax Code draws on best practices worldwide and contains well-recognized and respected concepts. As a result, the UAE Corporate Tax Law is ensured to be clear in its ramifications and easy to understand.

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corporate tax in uae

What is Corporate Tax Rate in UAE?

Corporate Tax will be levied at a headline corporate tax rate of 9% on Taxable Income exceeding AED 375,000. Taxable Income below this threshold will be subject to a 0% rate of Corporate Tax. Corporate Tax will be charged on Taxable Income as follows:

1. Resident Taxable Persons

  • 0% corporate tax rate for taxable Income not exceeding AED 375,000 (This amount is to be confirmed in a Cabinet Decision)
  • 9% corporate tax rate for taxable Income Exceeding AED 375,000

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corporate tax in uae

Who is Subject to UAE Corporate Tax?

The following "Taxable Persons" are generally subject to corporate Tax in UAE:

  • UAE corporations and other legal entities incorporated in the UAE or effectively managed and controlled there."
  • Natural people (individuals) who engage in business or engage in commercial activity in the UAE following the provisions of a Cabinet Decision to be announced in due course; and
  • Non-resident legal entities with a permanent presence in the UAE are referred to as non-resident juridical persons.

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UAE corporate tax

Exempted Person From Corporate Tax UAE

Under Article 4 of the Corporate Tax Law, the following Persons shall be exempt from Corporate Tax:a) A Government Entity.

b) A Government Controlled Entity.

c) A Person engaged in an Extractive Business that meets the following conditions:

  • The Person directly or indirectly holds or is interested in a right, concession, or License issued by a Local Government to undertake its Extractive Business.

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corporate tax consultants in uae

Farahat & Co - Corporate Tax Services in UAE

Only some people are aware of their actions to retain their position as tax-paying people and enterprises regarding taxation. Obtaining the services of expert Corporate Tax Consultants becomes crucial at this point, as it protects persons and organizations from legal repercussions. Keep your tax affairs in order, pay your dues on time with the help of a Corporate Tax Consultant, and continue to enjoy the prestige and respect that comes with paying your taxes. Our UAE Corporate Tax Consultants have extensive expertise in assisting clients in resolving their tax profiles through legal ways and applicable exemptions. Similarly, our UAE corporate tax advisory services daily align their tax portfolios with applicable laws and taxes.

Our Seasoned Corporate Tax Consultants Can Assist You With the Following:

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Frequently Asked Questions

Will UAE Corporate Tax apply to all enterprises in each Emirate?

Yes, as the UAE Corporate Tax is a federal tax, it applies to states of the Emirates.

To whom will the UAE Corporate Tax apply?

Except for exploiting natural resources, which will be subject to Emirate-level corporate taxes, UAE CT will apply to all UAE firms and commercial activities.

Will the UAE Corporate Tax apply to foreign companies and persons?

Only foreign firms and people that conduct continuous or regular trade or business in the UAE will be subject to UAE Corporate Tax.

How can you know if someone has a 'company' covered by UAE Corporate Tax?

It is usually accomplished by referencing the individual's possession of (or requirement to get) a business license or permission to engage in the relevant commercial, industrial, and professional activity in the UAE.

How can you know if a legal entity has an 'enterprise' that falls under the UAE CT's jurisdiction?

All actions carried out by a legal entity shall be considered "business activities" and hence fall within the UAE Corporate Tax.

How do you figure up how much of your business earnings or revenue is subject to UAE Corporate Tax?

The accounting net profit/income of a firm will be the taxable income after adjustments for specific elements to be stipulated under UAE Corporate Tax legislation.
The amount disclosed in the financial accounts prepared in line with globally accepted accounting standards is the accounting net profit/income of a firm.

Will a person investing in UAE real estate be subject to the UAE Corporate Tax?

Individuals investing in real estate in their personal capacity should be exempt from the UAE Corporate Tax if they are not required to get a commercial license or license to do such business in the UAE.