UAE Corporate Tax – Summary

  • What is corporate tax?
    • It is a form of direct tax levied on net income (profit) of the entity.
    • It will apply across all Emirates.
  • Effective date:
    • Corporate tax is effective from 1 June 2023.
    • A business will become subject to UAE CT from the beginning of the first financial year that starts on or after 1 June 2023.
  • Taxable persons:
    • UAE CT will apply to all UAE businesses and commercial activities.
  • Exempted persons:
    • Businesses engaged in extraction of natural resources.
    • Other exemptions and exclusions will be provided in due course.
  • Taxable income:
    • Taxable income will be the accounting net profit of a business reported in the financial statements prepared in accordance with internationally acceptable accounting standards, after adjusting for certain items to be specified under UAE CT Law.
  • Exempted income:
    • Dividends and capital gains earned by UAE businesses from its qualifying shareholdings (qualifying shareholding refers to an ownership interest in a UAE or foreign company that meets certain conditions to be specified in UAE CT Law)
    • Qualifying intra-group transactions and reorganizations subject to certain conditions specified under UAE CT Law.
  • UAE CT rates:
    • For taxable income up to AED 375,000 – 0%
    • For taxable income above AED 375,000 – 9%
    • A different rate is applicable for large MNCs [Large MNCs is a corporation that operates in its home country as well as other foreign countries through foreign branch, subsidiary, or other forms of presence. A Large MNC is a corporation that has a consolidated global revenue more than EUR 750m (c. AED 3.15bn)]
  • Freezones:
    • UAE CT will be applicable to free zone businesses, but CT incentives are offered to free zone businesses that comply with all regulatory requirement such as having the financial statements audited and that do not conduct business with mainland UAE.
    • Free zone businesses will be required to register and file CT returns
  • Losses:
    • Business losses (incurred from UAE CT effective date) can be set off against taxable income in subsequent financial periods.
    • Taxable losses from one group company can be used to offset taxable income of another group company provided certain conditions are met.
  • Tax credits:
    • Foreign CT paid on UAE taxable income will be allowed as tax credit against UAE CT liability.
  • Advance tax:
    • UAE businesses will not be required to make advance UAE CT payments.

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