UAE is a country that attracts businesses from all around the world and one of the main reasons for that was tax free environment in the country. UAE was known as a tax-free commerce hub.
But now it has been announced by the Ministry of Finance that UAE will be introducing a federal corporate tax on business profit for the first time. The companies will subject to UAE corporate tax by from the beginning of their first financial year that starts on or after 1st June 2023. Corporate tax will apply on the adjusted accounting net profit of the business.
This corporate tax will apply to all the businesses in UAE (except for the extraction of natural resources). The statutory tax rate will be 9% for taxable income exceeding AED 375,000 ($102,000) and it will be 0% tax rate for taxable income up to AED 375,000 which has implemented to support small businesses. It is also further stated that individuals will not be subject to tax on their income from employment, real estate, equity investment or other personal income. Also, the companies trading in free zone and not conducting business in onshore UAE will be exempt from corporate tax.
The main objectives of UAE corporate tax are to make UAE’s position stronger as world leading for investment and businesses, to ensure the international standards of tax transparency and preventing harmful tax practices and to enhancing the UAE’s growth and transformation to achieve its strategic objectives
Read: Tax Audit in UAE – Know the Procedure & Prepare yourself