Corporate Tax

The United Arab Emirates (UAE) Ministry of Finance (Ministry) announced on 31 January 2022 that it will introduce a federal corporate tax regime for the first time in the UAE.

Consultation

Corporate Tax in United Arab Emirates

The Ministry of Finance announced on 31 January 2022 that it will introduce a federal corporate tax regime for the first time in the UAE. Corporate Tax is a form of direct tax levied on the net profit of corporations and other businesses.

UAE Corporate Tax will apply to all UAE businesses and commercial activities alike, except for the extraction of natural resources, which will remain subject to Emirate level corporate taxation.

Foreign entities and individuals will be subject to UAE CT only if they conduct a trade or business in the UAE in an ongoing or regular manner.

Effective Start Date

The UAE Corporate Tax regime will become effective for financial years starting on or after 1 June 2023:

A business that has a financial year starting on 1 July 2023 and ending on 30 June 2024 will become subject to UAE Corporate Tax from 1 July 2023 (which is the beginning of the first financial year that starts on or after 1 June 2023)

A business that has a (calendar year) financial year starting on 1 January 2023 and ending on 31 December 2023 will become subject to UAE Corporate Tax from 1 January 2024 (which is the beginning of the first financial year that starts on or after 1 June 2023)

Registration and filing

Businesses will be required to register for UAE CT purposes. More information on the registration process will be provided shortly.

Businesses need to file a UAE CT return electronically once per financial period. A financial period is generally a year. No provisional or advance CT filings will be required. There will be no requirement to make advance UAE CT payments

Corporate Taxable Profits and Rates:

The taxable income will be the accounting net profit of a business, after making adjustments for certain items to be specified under the UAE CT law. Dividends and capital gains earned by a UAE business from its qualifying shareholdings will be exempt.

Business losses incurred (as from the UAE CT effective date) can be offset against taxable income in subsequent financial periods. Foreign CT paid on UAE taxable income may be allowed as a tax credit against the UAE CT liability.

0% for taxable income up to AED 375,000;
9% for taxable income above AED 375,000; and
a different tax rate for large multinationals that meet specific criteria.

If a company earns AED 400,000 in taxable profit in a given financial year.

The CT liability will be calculated as follows:

Taxable income of AED 0 – AED 375,000 at 0% = AED 0
Portion of taxable income exceeding AED 375,000 (i.e. AED 400,000 – AED 375,000 = AED 25,000) at 9% = AED 2,250.

Free Zones

UAE Corporate Tax will apply to all UAE businesses and commercial activities alike, except for the extraction of natural resources, which will remain subject to Emirate level corporate taxation.

Foreign entities and individuals will be subject to UAE CT only if they conduct a trade or business in the UAE in an ongoing or regular manner.

Tax Groups

A UAE group of companies can elect to form a tax group and be treated as a single taxable person, provided certain conditions are met.

Tax losses from one group company may be used to offset taxable income of another group company, provided certain conditions are met.

A UAE tax group will only be required to file a single tax return for the entire group.

Frequently Ask Questions

Will an individual’s salary income be subject to UAE Corporate Tax?

UAE CT will not apply on an individual’s salary and other employment income (whether received from the public or private sector).

Will an individual who invests in UAE real estate be subject to UAE Corporate Tax?

The investment in real estate by individuals in their personal capacity should not be subject to UAE Corporate Tax provided the individual is not required to obtain a commercial license or permit.

Will the income earned by a freelance professional be subject to UAE Corporate Tax?

UAE CT will generally apply to income earned from activities carried out under a freelance license/permit.

How can Parker Russell assist you?

Since its beginning, we have been at the front of UAE Tax, effectively handling tens of thousands of clients. Our experts can walk you through the steps and assist you in compiling the paperwork required by the FTA.

Parker Russell UAE is a certified tax agent in the United Arab Emirates. Our Tax Experts have handled and regulated a variety of circumstances and provided the best available solutions to businesses to ensure that they continue to function in the most efficient and effective manner possible.

For our clients, only the best will do, and our considerable experience in the UAE will ensure that your company receives the best and most timely services without sacrificing quality.

We’ve been using Parker Russell’s services since 2011. Their Tax Agent Consultant is very professional, efficient and has been great support to our accounts team over the years.

Donna Estall

Finance Manager, Broadway Malyan Ltd.

Our Strengths

Offices in the UAE

Clients Served

Years of Experience

Employees

Looking for a professional approved Tax Consultant in the UAE?

To ensure clients progress financially and socially.

GET A QUOTE