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UAE Corporate Tax: Learn About the Recent 9% Law

UAE Corporate Tax: Learn About the Recent 9% Law

Published On:
April 5, 2023

Several Emirati and foreign businesspeople and investors interested in launching investments in Dubai and other critical regions are interested in corporate tax in the UAE.

The introduction of a new law regarding the tax on corporate and commercial earnings marks a new economic milestone in the UAE's period of financial sector developments. According to Federal Decree No. 47 of 2022, the new law is set to take effect on or after June 1, 2023.

Further information about the UAE company tax law for the year 2023 is provided below:

 

What are the policies for implementing the UAE's corporation tax code in 2023?

Following the announcement by the UAE government of new tax legislation that would apply to enterprises beginning their fiscal year on or after next June, corporations will be subject to a federal tax by Federal Decree-Law No. (47) of 2022 regarding corporate and company tax.

This tax is a type of direct tax levied on a company's net income or profit and is levied at a rate of 9% on taxable income exceeding AED 375,000.

The corporate tax law in the UAE applies to:

  • All organizations and individuals who engage in investment operations in the country under a commercial license or permit to carry out the commercial, industrial, or professional activity.
  • Establishment of a business in a free zone.
  • Foreign companies and individuals who engage in continuous or regular commercial activity in the UAE.
  • Banking operations.
  • Businesses engaged in real estate management, construction, development, real estate agencies, and real estate brokerage activities.

The Federal Tax Authority is in charge of the administration, collection, and enforcement of corporation tax laws and rules.

 

In June 2023, UAE Corporation Tax Rate

The law imposes a 9% tax on taxable income over AED 375,000. Taxable income under AED 375,000 is taxed at 0%.

The law created a separate tax rate for major multinational firms that met certain criteria, based on the "second pillar" of the Organization for Economic Co-operation and Development's "Erosion of the Tax Base and Transfer of Earnings" program.

 

The UAE Corporation Tax Objectives

Although this news may appear to be concerning, we would like to tell you that the implementation of corporate taxes can provide numerous benefits to businesses in the UAE. The state enacted this law for certain reasons, including:

  • Increasing the UAE's worldwide leadership as a business and investment hub.
  • Striving to accelerate the country's development and transformation to meet its strategic goals of greater infrastructure, investment possibilities, and a better business environment.
  • Reaffirming the state's commitment to achieving international tax transparency requirements and combating damaging tax practices.
  • Investing in critical sectors such as education, healthcare, and innovation, as well as establishing new opportunities for businesses to collaborate with the government and reap the advantages.

 

We'll Assist! Contact Freezoner, Tax Advisors

Ask Freezoner's UAE tax specialists about the UAE business tax, which will take effect on June 1. You can submit your request by visiting the Contact Us page and finding the right communication method. Our consultants help you comprehend corporation tax legislation, register for tax, get a corporate tax registration number, and more. Freezoner keeps you informed on UAE and global business happenings, to proactively comply with the new tax regime. Let's work together to ensure growth and prosperity for our businesses and the UAE economy.

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