Corporate tax is a type of direct taxation levied on the net profit/income of businesses and other entities. In other jurisdictions, corporate tax is known as “Corporate Income Tax” or “Business Profits Tax.” UAE Corporate Tax will apply to all UAE businesses, with the exception of natural resource extraction, which will continue to be subject to Emirate-level corporate taxation.
Foreign entities and individuals will be subject to Corporate Tax only if they conduct ongoing or regular trade or business in the UAE. UAE Corporate Tax will be applied uniformly to all categories of profits and other (net) income reported in the Statement of Comprehensive Income (financial statements) prepared in accordance with internationally accepted accounting standards, such as IFRS (International Financial Reporting Standards).
UAE Corporation Tax Commencement:
The UAE Corporate Tax will go into effect on June 1, 2023. (Financial years commence on or after 1 June 2023 will be subject to corporate tax). Corporate tax will be levied on the business’s adjusted accounting net profit.
UAE Corporation Tax Threshold:
Income/Profits below AED 375,000: 0%
Income/Profits above AED 375000: 9%
Income Exempt from Corporate Tax:
• Employment Income.
• Real Estate (income proceeds).
• Investing in stocks and bonds.
• Other non-UAE business-related personal income
• Foreign investors who do not conduct business in the United Arab Emirates.
• • Income received by UAE entities from their eligible investments in the form of capital gains and dividends.
• Free zone entities that meet all mandatory requirements can continue to benefit from corporate tax benefits.
• Intra group transaction and restructuring.
• Domestic and cross border payments will be not subject to withholding tax.
Foreign Tax will be permitted to be credit against UAE corporate tax payable.
UAE businesses would be permitted to carry forward losses and use utilisation regulations.