13 December 2022
The UAE government announced a new corporate tax regime which will take effect next year.
Who is under the new regime?
Under the new tax regime, corporations and other businesses with taxable profits exceeding AED375,000 ($102,000) will be mandated to pay a standard rate of 9% on or after June 2023.
These include UAE companies that are incorporated or managed and controlled in the UAE as well as some entities in a free zone.
There are some exemptions from general rule
Existing free zone entities will be eligible to benefit from a zero percent corporate tax rate on qualifying income.
Natural resource extraction activities are exempt as well, but they remain subject to existing local taxation.
Public or private pension and social security funds, qualifying investment funds, as well as wholly-owned and controlled UAE subsidiaries of a government entity, government-controlled entity.
When will the corporate tax take effect?
The new tax will be effective for financial years starting on or after June 1, 2023.
Will entities pay other taxes?
Some businesses may still be subject to both the corporate tax and 'Emirate level taxation'. Emirate level taxes paid will not be credited against or otherwise reduce the amount of corporate tax payable.
However, businesses that are engaged in certain activities like the extraction of natural resources in the UAE, which are subject to 'Emirate level taxation', will be outside the scope of the corporate tax. But these businesses are still required to meet 'certain conditions'.
For further information on any of the points above contact
our team at LEXeFISCAL is ready assist with any queries, please contact
Mikita Makayou at mikita@lexefiscal.com or
Dr Frank J Clifford at clifford.frank@lexefiscal.com
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