Corporate Tax
The UAE Ministry of Finance (MoF) has announced that the UAE will introduce a federal corporate tax on business profits that will be effective for financial years starting on or after 01 June 2023.
The corporate tax rate of 9% will apply to profits exceeding AED 375,000.
While the final laws and regulations have not yet been released, a few key aspects of the law are:
- Free Zone businesses will be exempt from corporate tax provided no business is carried out in the mainland
- Dividends and capital gains earned by a UAE business from its qualifying shareholdings will be exempt from tax
- Qualifying intra-group transactions and reorganizations will not be subject to UAE CT provided necessary conditions are met
- Foreign entities and individuals will be subject to UAE CT only if they conduct a trade or business in the UAE in an ongoing or regular basis
- A UAE group of companies can elect to form a tax group and be treated as a single taxable person, provided certain conditions are met. A single tax return will be submitted for the entire group
- No withholding tax under UAE CT will be applicable on domestic and cross-border payments