What Is the Corporate Tax Update In UAE?

What Is the Corporate Tax Update In UAE?

Published On:
February 26, 2024

The UAE government and the Ministry of Finance launched a new corporate tax update. The new updates come as a review by the Federal Tax Authority on businesses' net profit. 

The  UAE government seeks to achieve strategic economic goals by creating a fast-paced transformation in the legislative regulations. 

The corporate tax update was effective in June 2023 to regulate the economic environment in the UAE. 

Read in-depth to explore the UAE corporate tax update (CT) if you run a profitable business in Dubai


Define The Tax Types

Let’s first define the tax types you may come across when working in the United Arab Emirates. 


What Is The Corporate Tax (CT)?

By definition, the corporate tax (CT) is a direct taxation on the corporates’ net profit from the business. 

According to the United Arab Emirates Portal, the corporate tax is “governed by Federal Decree-Law No.60 of 2023 and Amending Certain Provisions of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.”

Thus, UAE corporate tax law has been applied to businesses since June 2023.


What Is Net Investment Income Tax?

If you wonder what is net Investment Income Tax, it is simply a required tax on the net income of a corporation or entity according to their business activities.

Similarly, the net investment income tax is effective in June 2023.

By defining the main tax types, it's time to answer some of the essential questions about the UAE corporate tax.


When Shall Businesses Pay The Corporate Tax?

Some businesses shall pay corporate tax based on their domains and licenses. 

Entities with the following criteria will be subjected to the CT:

  • Businesses with commercial licenses
  • Free Zone businesses that are eligible for the corporate tax regulations 
  • Income tax on foreign investment
  • Banking operations and qualifying investment fund that meets the relevant conditions specified
  • Taxes for real estate investors and businesses that specialize in construction and development


What Is the UAE Corporate Tax Rate?

There is a specific UAE corporate tax rate specified by the Ministry of Finance. 

The following CT rates are the applied percentages on businesses' incomes: 

  • A 0% for taxable income up to AED 375,000
  • A 9% for taxable income above AED 375,000
  • A customized tax rate is to be specified for multinational corporations 

If you have more questions regarding corporate tax, you can check the FAQs on the Ministry of Finance or simply contact our Freezoner team to get a compelling consultation.


What Are the Additional Conditions in the Corporate Tax Update?

The Corporate Tax update comes with additional conditions in specific domains to achieve strategic goals in the UAE.

According to the Federal Tax Authority and the UAE government, the Cabinet Decision released additional conditions related to the exempted businesses including:

  • Investment Fund
  • Real Estate Investment Trust 
  • Investor Income 
  • Institutional Investor
  • Unincorporated Partnerships


Who Is Exempted from UAE Corporate Tax (CT)?

Some entities and individuals are exempted from the UAE corporate tax (CT). 

Hence, the UAE Federal Tax Authority will instantly exempt the following entities/individuals as per the corporate tax update:

  • Government entities that run mandated activities
  • Businesses engaged in the UAE Natural Resources activities 
  • Public Benefit Entities that are listed by the Cabinet Decision
  • Qualifying Investment Funds that meet the prescribed conditions
  • UAE juridical individuals who are engaged with the exempted entities
  • Individuals earned salaries and other employment income 
  • Individuals earned benefits from bank deposits
  • Foreign investor’s income earned from interest, royalties, capital gains, and other returns
  • Real estate investors in their personal capacity
  • Individuals with owned shares or other personal capacity


The Bottom Line

The bottom line, we highlighted the taxation rate of the corporate tax and elaborated on the corporate tax update. 

Yet, you can get back to our Freezoner team to explain more about how to pay the corporate tax. 

On a side note, if you still wondering how to start a business in Dubai, you can contact us via email ([email protected]), and we will simplify the whole journey from A to Z.



What Is the Corporate Tax Update In UAE?

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