UAE Corporate Tax (CT)
9% of Corporate Tax in UAE implemented from June 1, 2023 for businesses with profits exceeding AED 375,000 and 0% Corporate tax in UAE for free zone businesses. Are you ready for corporate tax in UAE?
Corporate Tax Rates in UAE
Following are the Corporate Tax 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 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 Corporate Tax rate of 0% on their "Qualifying Income" 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 corporate tax rate of 9%.
How is the Corporate Tax in UAE is Calculated?
You already know that profit up to AED 375,000 is charged 0%
Suppose the profit above AED 375,000 = 400,000 , then 400,000-375,000=AED 25,000 at 9% becomes AED 2,250
Corporate Tax for the financial year is AED 2,250
Profits below or upto AED 375,000 will not be subject to 9% corporate tax in UAE.
Impact of Corporate Tax on Foreign Individuals & Entities
The corporate tax 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.
Implementation of Corporate Tax in the UAE
Corporate tax 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 Corporate Tax and obtain a Corporate Tax Registration Number.
- The Federal Tax Authority requests the Exempt Persons to register for Corporate Tax.
Corporate Tax Return Filing in UAE
A Taxable Person should file a Corporate Tax return for every tax period within 9 months from the end of a specific period. This deadline is applied for paying the Corporate Tax due in terms of the Tax Period for which a return is filed.
There will be corporate tax fines and penalties in UAE if one does not stay compliant with the regulations of Corporate Tax set by the Ministry of Finance and the Federal Tax Authority.
Exempt from UAE Corporate Tax
- Businesses pertaining to the extraction of natural resources, influenced by the Emirate-based corporate taxation
- Intra-group transactions and reorganizations, ensuring that the conditions are met
- Earnings such as salary and similar income, from the public or private sector
- Interest from bank deposits or saving schemes
- Income from dividends, capital gains, interest, royalties, and other investment returns earned by a foreign investor
Corporate Tax Services in UAE
Expert CA are covering all the elements of Corporate Tax. Our highly professional and experience corporate tax consultants will assist you in implementing corporate tax strategies in the most effective way. Expert Auditing is offering the following Corporate Tax Services in UAE:
- Corporate Tax Assessment
- Corporate Tax Registration
- Corporate Tax Return Filing
- Corporate Tax Accounting
- Corporate Tax Compliance
- Corporate Tax Advisory
