Corporate Tax in UAE
Expert Guidance for Your Business
UAE introduced Corporate Tax on business profits (effective June 1, 2023). Statutory tax rate is 9% for profits exceeding AED 375,000, below which profits are tax-exempt. Compliance is mandatory, including filing tax returns and maintaining proper records following relevant laws. Supports growth and strategic goals.
What is Corporate Tax Rate in UAE
Corporate Tax will be levied at a headline corporate tax rate of 9% on Taxable Income exceeding AED 375,000. Taxable Income below this threshold will be subject to a 0% rate of Corporate Tax. Corporate Tax will be charged on Taxable Income as follows:
1. Resident Taxable Persons
- 0% corporate tax rate for taxable Income not exceeding AED 375,000 (This amount is to be confirmed in a Cabinet Decision)
- 9% corporate tax rate for taxable Income Exceeding AED 375,000
2. Qualifying Free Zone Persons
- 0% corporate tax rate for Qualifying Income
- 9% corporate tax rate for taxable Income that does not meet the Qualifying Income definition
Applicability of Corporate Tax in the UAE
Corporate Tax (CT) will apply to:
- All businesses and individuals conducting business activities under a commercial license in the UAE.
- Free zone businesses (The UAE CT regime will continue to honor the CT incentives currently being offered to free zone businesses that comply with all regulatory requirements and do not conduct business set up in the UAE’s mainland.)
- Foreign entities and individuals only if they conduct a trade or business in the UAE in an ongoing or regular manner.
- Banking operations.
- Businesses engaged in real estate management, construction, development, agency, and brokerage activities.
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Common Questions About Corporate Tax
Will UAE Corporate Tax apply to all enterprises in each Emirate?
Yes, as the UAE Corporate Tax is a federal tax, it applies to states of the Emirates.
To whom will the UAE Corporate Tax apply?
Except for exploiting natural resources, which will be subject to Emirate-level corporate taxes, UAE CT will apply to all UAE firms and commercial activities.
Will the UAE Corporate Tax apply to foreign companies and persons?
Only foreign firms and people that conduct continuous or regular trade or business in the UAE will be subject to UAE Corporate Tax.
How can you know if someone has a 'company' covered by UAE Corporate Tax?
It is usually accomplished by referencing the individual’s possession of (or requirement to get) a business license or permission to engage in the relevant commercial, industrial, and professional activity in the UAE.
How do you figure up how much of your business earnings or revenue is subject to UAE Corporate Tax?
The accounting net profit/income of a firm will be the taxable income after adjustments for specific elements to be stipulated under UAE Corporate Tax legislation. The amount disclosed in the financial accounts prepared in line with globally accepted accounting standards is the accounting net profit/income of a firm.
How can you know if a legal entity has an 'enterprise' that falls under the UAE CT's jurisdiction?
All actions carried out by a legal entity shall be considered “business activities” and hence fall within the UAE Corporate Tax.
Will a person investing in UAE real estate be subject to the UAE Corporate Tax?
Individuals investing in real estate in their personal capacity should be exempt from the UAE Corporate Tax if they are not required to get a commercial license or license to do such business in the UAE.