UAE Corporate Tax

UAE Corporate Tax

UAE Corporate Tax : The Ministry of Finance has announced the introduction of a 9% federal corporate tax in the UAE on business profits with a threshold of AED 375,000. This comes into effect from the financial year beginning 1st June 2023.

UAE Corporate Tax is amongst the most competitive in the world and the lowest in the GCC. The UAE CT is a Federal tax and will therefore apply across all Emirates and The Federal Tax Authority will be responsible for the administration, collection, and enforcement of UAE CT.

The Ministry of Finance will remain the ‘competent authority’ for purposes of bilateral/multilateral agreements and the international exchange of information for tax purposes

Scope
UAE CT will apply to:
All businesses and individuals conducting business activities under a commercial licence in the UAE.
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Free zone businesses (The UAE CT regime will continue to honors the CT incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business set up in the UAE’s mainland.)

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Foreign entities and individuals only if they conduct a trade or business in the UAE in an ongoing or regular manner
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Banking operations.

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Businesses engaged in real estate management, construction, development, agency and brokerage activities.
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Exemptions from UAE Corporate Tax

Below are the rules regarding exemptions from the UAE corporate tax.

Businesses engaged in the extraction of natural resources are exempt from CT as these businesses will remain subject to the current Emirate level corporate taxation.
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Dividends and capital gains earned by a UAE business from its qualifying shareholdings will be exempt from CT.
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Qualifying intra-group transactions and reorganizations will not be subject to CT, provided the necessary conditions are met.

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UAE Corporate Tax Rate
As per Ministry of Finance, CT rates are:
0% for taxable income up to AED 375,000
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9% for taxable income above AED 375,000 and
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UAE Corporate Tax Rate : Applicability to free zones and financial free zones
Free Zone (including financial free zones) businesses in UAE will be subject to Corporate Tax. However, it has been clarified that the Corporate Tax regime will continue to honour the corporate tax incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business in mainland UAE
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Businesses established in a free zone will be required to register and file a Corporate Tax Return.
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