As per the UAE Federal Decree-Law No. 47 of 2022, which pertains to the taxation of corporations and businesses (the “Corporate Tax Law”), companies will be liable to pay UAE Corporate Tax starting from the commencement of their initial financial year that commences on or after 1st June 2023. Corporate tax is a type of direct tax imposed on the net income or earnings of corporations and other entities derived from their business activities.
CT rates are as follows:
- 0 per cent for taxable income up to AED 375,000
- 9 per cent for taxable income above AED 375,000.
CT will apply to:
- all businesses and individuals conducting business activities under a commercial license in the UAE.
- free zone businesses (The UAE CT regime will continue to honour 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.)
- Foreign entities and individuals only if they conduct a trade or business in the UAE in an ongoing or regular manner
- Banking operations
- Businesses engaged in real estate management, construction, development, agency and brokerage activities.
Exemptions
- Businesses engaged in the extraction of natural resources
- Dividends and capital gains earned by a UAE business from its qualifying shareholdings.
- Qualifying intra-group transactions and reorganizations provided the necessary conditions are met.
