UAE will tax corporate profits from June 2023
0% tax rate for taxable income up to Dh375,000 to support small business and startups
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The Ministry of Finance of the UAE has announced that the UAE will introduce a corporate tax on business profits that will be effective starting June 1, 2023.
This new corporate tax regime has been designed to incorporate best practices globally and minimise the compliance burden on businesses.
Corporate tax will be payable by the companies on the profits as reported in their financial statements prepared in accordance with internationally acceptable accounting standards, with minimal exceptions and adjustments.
Businesses and commercial activities to be taxed
The corporate tax will apply to all businesses and commercial activities alike, except for the extraction of natural resources.
With a standard tax rate of 9% and a 0% tax rate for taxable profits up to Dh375,000 to support small businesses and startups.
Corporate tax incentives
Free zone businesses that comply with all regulatory requirements of the UAE and that do not conduct business with mainland UAE will still benefit from Tax Incentives.
The UAE will not impose withholding taxes on domestic and cross border payments, or subject foreign investors who do not carry on business in the UAE to corporate tax.
UAE business will be exempt from paying tax
If you have setup an international headquarter in the UAE, the business will be exempt from paying tax on capital gains and dividends received from its qualifying shareholdings, and foreign taxes will be allowed to be credited against UAE corporate tax payable.
One corporate tax return each financial year
Businesses will only need to file one corporate tax return each financial year and will not be required to make advance tax payments or prepare provisional tax returns.
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