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The UAE Corporate Income Tax Law: 4 Frequently Asked Questions, Answered!

The UAE has recently made a sweeping change in its tax laws after it announced the introduction of a federal corporate tax in the country, which will be enforced in 2023.

Of course, this new tax regime shall be based on international best practices and will have low or even minimal compliance burden on companies—maintaining the UAE’s position as the best hub for investors and businesses.

Since its introduction, we have been constantly asked about what it means for entrepreneurs and investors, as well as more details about this new tax law introduction.

Here are the top four queries raised by businesses in the country and abroad:

Is there a corporate tax in the UAE?

Yes, the UAE Ministry of Finance and the UAE Federal Tax Authority (FTA) announced the new corporate tax regime in the country, which will be effective for financial years starting on or after June 1, 2023.

Is there corporate tax in Dubai?

Yes, the new corporate tax regime will also apply in Dubai. However, even before this announcement, Dubai—as well as most Emirates—enacted their own corporate tax decrees in the late 1960s.

Such degrees were similar in nature; deal in broad terms with the identities of taxable persons, rates, administration, profits, and loss relief; as well as limit the scope of taxation to companies carrying out a trade or business in the respective Emirates.

Prior to this new tax regime, there is only a limited corporate tax on the oil and gas, as well as branches of foreign banks.

Is the UAE likely to introduce corporate taxes?

As mentioned, it has already introduced corporate taxes on 31 January 2022—which will be enforced sometime in June 2023.

What is the corporate tax rate in the UAE?

According to the UAE Federal Tax Authority, the headline corporate tax rate for taxable income exceeding AED375,000 is 9%, while the tax rate for taxable income earning up to AED375,000 will be 0% (a way to support small businesses and start-ups in the country).

With such rates, the UAE corporate tax regime will be amongst the most competitive in the world!

If you want to know more information about the new UAE Corporate Tax Law, message us now and we’ll be happy to assist!

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