UAE’s new Corporate Tax law

The United Arab Emirates Ministry of Finance recently announced the long-awaited Corporate Tax Law, set to take effect from the beginning of the financial year, June 1 2023.

The UAE’s new standard corporate tax rate of 9% is reportedly the lowest rate within the GCC region, beneath Qatar and Oman’s rates of 10% and 15% corporate income tax respectively.

The Corporate Tax will only be levied on taxable income exceeding AED 375,000. Incomes below this threshold will be subject to 0% corporate tax.

The objective of this tax is to aid the UAE in the acceleration of its economic development and transformation. It will also allow the country to meet international tax standards. Furthermore, the nation will solidify its position as a leading jurisdiction, centre for global investment and business hub.

This direct tax will be levied on the net profit or income of businesses.

What does it mean for your business?

Your business will be subject to the 9% corporate income tax policy from June 1st in the coming year if you are:

  • currently conducting business activities within the UAE under a commercial licence (free-zone included)
  • a foreign company engaging in regular trade and business locally
  • involved in banking operations, construction, development, real estate management or agency and brokerage.

Corporate Tax Law Exemptions

The following businesses are exempted of the Corporate Tax:

  • Government entities or government-controlled entities
  • Businesses involved in natural resource extraction or non-natural resource activities
  • Investment, pension, and social security funds
  • Public benefit entities
  • Entities that are entirely controlled by an exempted person.  
  • Free-zone businesses that make business only with other free-zones or outside of the United Arab Emirates

It is necessary to keep up with these developments in the business world, in order to optimise our business practices.

This new tax policy will directly affect many businesses. It is worth emphasising on the importance of ensuring the highest standard with regards to accurate bookkeeping of such business data.

For any consulting or tax-related inquiries, contact us.