Corporate Tax in the UAE
Corporate Tax is a form of direct tax levied on the net income or profit of corporations and other businesses. We are Supporting Small Businesses in the UAE with Registration, Consultation and Corporation Tax Filing
Are You Prepared for Corporation Tax?
Effective 1 July 2023 Corporate Tax will affect all aspects of business including purchasing, distributions, operations and hiring. Our experts will ensure you are prepared with minimal fuss.
How We Support Your Compliance
1. Corporate Tax Registration
First step to compliance is registration. Ensuring this is correctly completed is imperative to prevent penalties. Our team will ensure supporting documentation is in order to enable a smooth registration process.
2. Corporate Tax Consulting
Our tax experts and partners will dive deep into your business to understand the parts of your business most as risk with compliance. Our team will ensure your business is tax efficient and will support any process changes required.
3. Corporate Tax Software
Tax compliance and preparation should not be a manual process without audit trails. Our software partners will provide solutions which pulls data from your accounting system to prepare your tax return with a few clicks. You will also have full transparency on your calculation.
4. Corporate Tax Audit and Submission
Our tax experts and partners manage multiple clients ranging from varied industries and can draw from their comprehensive experience in tax compliance from Saudi Arabia and the UK. Rest assured our service will ensure are full compliance with corporation tax
Key Highlights on UAE Corporation Tax
- UAE Corporation tax rate one of the lowest within the GCC region and along major economies
- Tax applicable on profits above AED 375,000 and not below that
- Standard Corporate Tax Rate is 9%
- CT effective from 1 July 2023 from financial year 2023 ending on 30 June 2024
- The financial year for businesses starting 1 January 2023 and ending 31 December 2023 will become subject to the tax beginning from 1 January 2024
- Tax incentives offered to freezone businesses complying with all regulatory requirements will remain
- Capital gains and dividends received by the companies in UAE from their qualifying shareholdings are also exempt from paying CT.
What is Corporation Tax?
Corporate Tax (CT) is a direct tax levied on the net income or profit of corporations and other businesses.
Corporate Tax is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions.
By introducing CT, the UAE aims to cement its position as a leading global hub for business and investment, as well as meet international standards for tax transparency and prevent harmful tax practices. Most countries in the world have a comprehensive CT regime, including most of the GCC Member States.
When will Corporate Tax come into effect?
The CT will apply to financial years starting on or after the 1st of June 2023, according to the UAE Ministry of Finance.
For instance, a business that has a financial year starting on the 1st of July 2023, and ending on the 30th of June 2024, will become subject to UAE CT from the 1st of July 2023.
A business with a financial year starting on the 1st of January 2023, and ending on the 31st of December 2023, will become subject to UAE CT from the 1st of January 2024.
What is the UAE Corporation Tax Rate?
The CT rates are
- 0% for taxable income up to AED 375,000;
- 9% for taxable income above AED 375,000;
and a different tax rate for large multinationals that meet specific criteria set with reference to ‘Pillar Two’ of the OECD’s (Organisation for Economic Cooperation and Development’s) Base Erosion and Profit Shifting project.
Corporation Tax - FAQ
Corporate Tax (CT) is a direct tax levied on the net income or profit of corporations and other businesses.
Corporate Tax is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions. Most countries have a comprehensive CT regime, including most of the GCC Member States.
0% for taxable income up to AED 375,000
9% for taxable income above AED 375,000
There is also a different tax rate for large multinationals that meet specific criteria set with reference to ‘Pillar Two’ of the OECD’s (Organisation for Economic Cooperation and Development’s) Base Erosion and Profit Shifting project.
Corporation tax is effective from 1st of June 2023 and it is expected that filing and payment deadlines will be 9 months after the financial year end.
Companies operating in Free Zones will be subject to UAE Corporation Tax, but the UAE Corporation Tax regime will continue to apply incentives offered to free zone businesses (providing they comply with the regulatory requirements and do not conduct business with mainland UAE).
Entities operating in Free Zones will be subject to a 0% CT rate on their taxable income. If an entity located in a Free Zone derives non-passive income from mainland UAE all its income will be subject to the general CT regime.
Under the upcoming UAE Corporation Tax regime, foreign companies will be subject to the corporate tax rate of 9% on annual taxable income exceeding AED 375,000.
To qualify for the 9% annual tax rate a foreign company operating in UAE has
Their Permanent Establishment (PE); or
Their Place of Effective Management; or
Their source of income.
On the 1st of June 2023, the corporate tax rate will be 9% of the net profit made by businesses in the AUE. In order to support small businesses and start-ups, the corporate tax rate will be ‘0’ % if the net profit is up to 3,75,000 AED.
The best way to prepare for the new Corporation Tax is to have accounting software which covers all the necessary requirements. The best accounting software for businesses currently is QuickBooks Accounting software.
On the 1st of June 2023, the corporate tax rate will be 9% of the net profit made by businesses in the UAE. In order to support small businesses and start-ups, the corporate tax rate will be ‘0’ % if the net profit is up to AED 375,000.