9% of Corporate Tax in UAE implemented from June 1, 2023 for businesses with profits exceeding. AED 375,000 and 0% CT in UAE for free zone businesses.
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Corporate Tax in UAE
What is Corporate Tax in the UAE? The Introduction of CT will be effective from 1 June 2023.
with a standard rate of 9% for businesses earning above AED 375,000.
The UAE CT law includes world-class taxation practices focused to develop the country’s economy.
It’s helping businesses to meet international standards, and preventing illegal tax practices.
Following are the CT Rates in UAE for businesses:
- 0% corporate tax rate applies to taxable income up to AED 375,000
- 9% corporate tax rate applies to taxable income over AED 375,000
- 15% corporate tax rate applies to all multinational corporations subject to OECD Base Erosion and Profit-Sharing laws that belong within Pillar 2 of the BEPS 2.0 framework, i.e. combined worldwide revenues in excess of AED 3.15 billion
Corporate Tax UAE start date
The CT will be applicable for financial years starting on or after 1 June 2023.
Any company that adopts a fiscal year starting on 1 June 2023 and ending 31 May 2024 will be subject to CT starting 1 June 2023. The first tax return filing is likely to be due towards the end of 2024.
Any company that adopts a calendar year starting 1 January 2023 and ending 31 December 2023. it will be subject to CT starting 1 January 2024 and filing is likely to be due towards mid-2025.
Corporate Tax on Free Zones in UAE
A Free Zone company or a Qualifying Free Zone Person can be benefitted from a special CT rate of 0% on their “Qualifying Income in UAE” exclusively.
The qualifying income is based on the transactions made by the entities.
If the Free Zone Businesses come under the CT regulations for Free Zones as per the UAE CT Regime, they might be subjected to the CT rate of 9%.
Impact of CT UAE on Foreign Individuals & Entities
The CT affects foreign individuals who regularly conduct business in the UAE. A foreign investor earning income from dividends, capital gains, interest, royalties, and other investment returns will not be affected by Corporate Tax in the UAE.
Impact of Implementing CT in the UAE
The implementation of Corporate tax in Dubai impacts the following:
- Businesses and entrepreneurs involved in activities under a commercial license in the UAE
- Free Zone businesses (Tax policy observes the rights provided to the free zone businesses adhering to the regulations, and not performing business in the UAE mainland)
- Operations concerning the Banking sector
- Foreign companies and investors, provided they regularly conduct trade or business
- Taxable Persons – that include Free Zone Persons, need to register for CT and obtain a CT Registration Number.
- The Federal Tax Authority requests the Exempt Persons to register for CT.
