UAE Corporate Tax: Let’s Get Started.
In January 2022, the UAE Ministry of Finance announced plans to introduce a federal Corporate Tax (CT) on businesses' net profits. Thus, the UAE is pursuing the following goals:
- to solidify its position as a leading global hub for business and investment
- to accelerate its development and transformation to achieve strategic objectives
- to uphold its commitment to meeting international tax transparency standards and preventing harmful tax practices.
The tax has come into effect on either June 1, 2023, or January 1, 2024, depending on the financial year followed by the business, and is applicable across all the emirates.
According to the Ministry of Finance, the Corporate Tax rates will be:
- 0% for taxable income up to AED 375,000
- 9% for taxable income above AED 375,000
- a different tax rate for large multinationals meeting specific criteria (to be specified further).
The UAE Ministry of Finance has also announced an exact timeline for businesses to complete the registration filings based on the month of their licensing. Failure to register for corporate tax before the given deadlines will result in a penalty of AED 10,000 and a fine.
Small businesses with revenue below a certain threshold may be eligible for 'small business relief', where they are treated as having no taxable income during the relevant period and may benefit from simplified compliance requirements. To claim this relief, businesses must make an election to the FTA. The revenue threshold for qualifying for 'small business relief' shall be specified further."