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Corporate Tax in UAE

The United Arab Emirates (“UAE”) published the Federal Decree-Law No. (47) Of 2022 on the Taxation of Corporations and Businesses (hereinafter referred to as the “Corporate Tax Law”) on December 9, 2022. The Corporate Tax Law, which applies to fiscal years beginning on or after June 1 2023, establishes the legal framework for establishing and operating a Federal Corporate Tax in the UAE.

The corporate Tax in 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 centre, 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.

What is Corporate Tax in UAE?

A direct Tax known as corporate Tax is imposed on the net profits of companies and other enterprises. In some other countries, corporate Tax is also known as “corporate income tax” or “business profits tax.”

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Cabinet Decision on  annual Taxable Income subject to Corporate Tax

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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

  • 1. 0% corporate tax rate for taxable Income not exceeding AED 375,000 (This amount is to be confirmed in a Cabinet Decision)
  • 2. 9% corporate tax rate for taxable Income Exceeding AED 375,000

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Who is Subject to UAE Corporate Tax?

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

  • 1. “UAE corporations and other legal entities incorporated in the UAE or effectively managed and controlled there.”
  • 2. 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

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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:

  • 1. 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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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.

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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.