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Coming in 2023: Taxation In The UAE

UAE Taxation

Coming in June 2023 – the UAE Corporate Tax.

From June 1st onwards, businesses in the UAE will be required to pay a corporate tax of 9% on profits that exceed Dh375,000.  Profits at or below that threshold won’t be subject to taxes, helping new and small firms who are on their way to growing their business and building up their revenue streams. 

Companies will be liable to UAE corporation tax beginning with their first fiscal year that begins on or after June 1, 2023, according to Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses. 

According to the Ministry of Finance, the law is an essential step toward creating an integrated tax system that boosts the UAE’s competitiveness in the global economy. The Dh375,000 threshold was set to recognize the crucial role that new and small businesses play in the UAE’s economy.

No Salary Tax

Payroll and other personal income from employment, whether from labor in the public, semi-public, or private sectors, will not be subject to corporate tax in UAE. Along with investing in real estate on a personal basis, interest and other personal income from bank deposits or savings plans are also exempt from taxation in the UAE.

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Taxation In The UAE

The reform has also relieved some businesses of their tax obligations. 

Natural resource extraction is not subject to corporate tax in UAE. However, they continue to be taxed locally at the emirate level. Due to their critical importance and contribution to the social fabric and economy of the UAE, organizations like government institutions, pension funds, investment funds, and public benefit organizations are eligible for additional exemptions, according to a statement. 

Existing free zone companies will also be eligible to benefit from a corporate tax in UAE rate of 0% on qualifying income.

In addition, the tax system offers considerable relief for transfers and restructurings within groups and permits group corporations to share available tax losses.

The UAE’s support for the OECD’s Inclusive Framework on Base Erosion and Profit Shifting is reflected in the corporate tax law through its obligations to enact a global minimum tax for multinational corporations, improve tax transparency, and stop unfair tax practices.

Conclusion

Plan and consider your current costs. Now is the time to implement a lean structure, and we can guide you on how to achieve this and fill out your corporation tax return (free zone companies will still be required to do so after June 2023, even though they are not required to pay the tax itself). 

We also offer several extra services to business owners looking to launch their ventures in Dubai. Benefit from the ongoing 0% corporate taxation in UAE rate we provide and join the hundreds of other business owners who have established successful businesses in the UAE. Call Business Incorporation Zone and learn more about our Bookkeeping services!

 

 

 

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