Corporate tax in the UAE 2023 – what to expect?

In 2022, the UAE Ministry of Finance announced that it will introduce a federal corporate tax (CT) on the net profits of businesses.

This tax will apply either on June 1, 2023 or on January 1, 2024, depending on the fiscal year of the business. This tax will be applied throughout the territory.

The UAE is on the way to creating a more sustainable and progressive future with a stable revenue stream that can be reinvested in strategic community initiatives in the future.

Let's consider specific cases when the corporate tax will be applied under the new legislation :

• in all enterprises and individuals persons who carry out business activities regulated by a commercial license.
• Free zones ( or free zones ).
• Foreign legal entities and natural persons (provided they conduct trade and /or business in on the territory of the UAE - on a permanent or regular basis ).
• Banking operations.
• Companies engaged in real estate management, development, construction, agency, and brokerage activities.

Who will NOT be subject to corporate tax?

• Institutions that extract natural resources are exempt from corporate tax (they are subject to the current one at the level of the emirates ).
• Dividends and capital gains received by a business in the UAE from qualifying shareholdings.
• Qualifying intra-group transactions and reorganizations will not be subject to CT, provided the necessary conditions are met.

In addition, CT will not be applied to:

• wages and other income from the employment of persons received in the public or private sector.
• interest and other income received by them by an individual from bank deposits or savings schemes.
• income of foreign investors received and from dividends, capital gains, interest, royalties, and other investment income.
• investments in real estate of individuals.
• dividends, capital gains, etc. income received by them individuals from owning shares or other securities for their personal purposes.

Basic rates

According to the official data of the Ministry of Finance, the rates are:

• 0% for taxable income up to AED 375,000.
• 9% for taxable income above AED 375,000 and
• other rates and taxes ( no details yet ) for large multinational corporations.

How can a business prepare for changes in corporate tax regulation?

• read carefully and regularly check the websites of the Ministry of Finance and the Federal Tax Authority for additional information on the corporate tax regime.
• study the requirements for your business under the Corporate Tax Law, including, for example:

1. the accounting/tax period for your business;
2. when will your business need to submit a tax return;
3. what elections or applications your business may or must make for corporate tax purposes;
4. financial information and records will need to be kept for corporate tax purposes.

Our company understands that tax law can be confusing and difficult for many people and businesses.

In order to avoid possible problems and save you time, we advise you to contact our professional lawyers for tax advice. Our experts have deep knowledge in the field of tax law and are always ready to provide you with the necessary assistance and advice.

We work to make your life easier by helping you understand tax requirements and find optimal solutions for your business or personal finances.

Contact us today and see for yourself our professionalism and efficiency !