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Attention Tax Managers and Tax Agents!

The new tax law in the United Arab Emirates (UAE) regarding corporate tax includes the following key points that you MUST know:

1. Introduction of Corporate Tax:

The UAE will introduce a federal corporate tax effective after June 1, 2023. The tax will apply to all UAE businesses except for those involved in the extraction of natural resources which will remain subject to Emirate level corporate taxation.

2. Tax Rates:

• 0% tax rate for small businesses and startups, specifically for taxable income up to AED 375,000.
• 9% headline corporate tax rate will apply to taxable business profits exceeding AED 375,000.

3. Scope:

Foreign entities and individuals will only be subject to Corporate Tax if they conduct a trade or business in the UAE in an ongoing or regular manner.

4. Objectives:

• Enhancing the UAE’s position as a global hub for business and investmen
• Meeting international standards for tax transparency and preventing harmful tax practices.
• Accelerating the UAE’s development and transformation to achieve its strategic objectives.

5. Exemptions and Zero Tax:

• There will be exemptions for UAE-based headquarters and international business hubs.
• No taxation on foreign direct investment and personal income.

6. Support for Small Businesses:

The tax law is designed to support small businesses and startups with a 0% tax rate for taxable income up to a certain threshold.

7. Compliance:

The law aims to minimize compliance burdens for businesses.

8. Application:

The Corporate Tax will apply equally to all categories of profits and other (net) income reported in the financial statements prepared in accordance with internationally acceptable accounting standards.

These key features are part of the UAE's initiative to align its tax system with international standards while also supporting the business ecosystem within the country.

If you are in the Tax field, let's get in touch! We are currently recruiting a "Relationship Manager" for a Global Consultancy firm.

You can reach out to me by email: daniel@fundspartnership.com

Happy Tax year!

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