Corporate Tax Services in UAE

UAE authorities have announced that they will introduce corporate tax from June 1, 2023. Corporate tax services is a type of direct tax levied on the net income or profits of businesses and other business entities.

Objectives of Corporate Tax in UAE 

UAE’s Global Trade and Investment Strategy

• Enhancing UAE’s global trade and investment prominence.
• Adherence to global tax transparency norms.
• Accelerating UAE’s development and transformation for strategic goals.

Scopes of Corporate Tax

According to the UAE government, the scope of corporate tax will be.

• All companies and individuals operating in the UAE have a valid business license.
• The UAE’s corporate tax regime will continue to prioritize corporate tax incentives currently available to free zone companies that meet all legal requirements and do not have established business operations on the mainland.
• Only foreign organizations and individuals who regularly or continuously conduct business or trade in the UAE are eligible.
• Banking activities
• Enterprises or companies engaged in real estate development, construction, agency, and brokerage.

Principles of Corporate Taxation

The UAE’s Ministry of Finance has announced that businesses will be subject to corporate tax from 1 June 2023, aligning the country with other Gulf Cooperation Council countries. Starting in June, a 9% federal corporate tax will be imposed on businesses with annual profits over AED375,000 (US$102,093), while zero tax will be levied on those with profits below that amount. The UAE is the fifth country in the GCC to implement a corporate tax regime, with the lowest rate among the five. Foreign investors and free zone businesses will continue to benefit from tax-free incentives. No tax will be applied on personal income, real estate, investments, or income from overseas business.

Who will be subject to UAE corporate Tax?

All businesses with taxable profits (net) above AED 375,000 are subject to corporate income tax and must pay a certain percentage of their net profits as corporate tax.

How to determine the taxable income for UAE corporate Tax?

According to the announcement of the UAE Ministry of Finance in January 2022, corporate tax services in the UAE will be applied at a standard rate of 9% with the following tax segments and rates:

• 0% for taxable income up to AED 375,000
• 9% for taxable income above AED 375,000
• A different tax rate (not yet specified) is available to large multinational companies that meet specific criteria.

What is Tax Period?

The tax period of a taxable person is determined as the fiscal year or part of a fiscal year in which the taxpayer must submit a tax return. Pursuant to this Decree, the corporate tax period or fiscal year of the taxable person shall be the calendar year or the twelve (12) month period for which the taxable person prepares its financial statements. A taxable person may submit a request to the regulatory authority to request a change to their tax period, including a change to the start or end date or another tax period. This change is subject to the conditions set by the competent authority.

When will the UAE corporate tax regime become effective?

The CT will be applicable for financial years beginning on or after June 1, 2023

ICB Corporate Tax Services in UAE

At ICB, we understand the complex landscape of tax regulations and the critical role they play in the success of your business. As your dedicated tax consultant in Dubai, we offer a comprehensive suite of services tailored to meet the unique needs of your business and ensure compliance with local tax laws.

Our Expertise:

At ICB, we pride ourselves on our team of seasoned tax professionals who bring a wealth of knowledge and experience in navigating the intricate tax environment in Dubai. Whether you are a multinational corporation or a local business, our experts are well-versed in providing strategic tax solutions that optimize your tax position and drive your business forward.