UAE to implement Corporate Tax from June 2023

UAE to implement Corporate Tax from June 2023

UAE is going to implement a federal corporate tax on business profits for the first time. The Ministry of Finance of UAE officially announced that the new corporate tax of 9% on profits will take effect on June 1, 2023.


It's the best opportunity to align the country with several other governments across the world but it also reduces the country's competitive strength.


As part of its effort to diversify revenue sources away from oil, the UAE has been slowly implementing additional taxes.


The UAE - home to Abu Dhabi, Dubai, and the other five Emirates has started taking initiatives to entice foreign investors to stay, including relaxing limitations on corporate ownership rules and providing long-term visas for some. It has also liberalised switching to a Monday-Friday workweek.


The UAE's Ministry of Finance announced that a new federal profit tax of 9% will take effect on June 1, 2023. Personal income from a job, real estate, and other investments, as well as profit obtained from a business registered outside the UAE, will be exempt from the corporate tax. With few exclusions and changes, the corporate tax will be levied on the profits of UAE enterprises as recorded in their financial statements, prepared in compliance with internationally established guidelines.


The United Arab Emirates has consistently presented itself as a nation where international investors are welcomed and income is tax-free. Low taxes and a business-friendly atmosphere has helped to shape the 50-year-old country over time. Companies in UAE-free zones are likewise exempt from the new corporate tax unless they conduct their services onshore. Oil and gas industries are another exceptions, as they have their own taxation structures. In an effort to help small enterprises and startups, a zero percent tax rate will be applied to taxable profits up to Dirham 375,000.


The ministry also stated that UAE enterprises will be given sufficient time to prepare for the implementation of the new corporate tax, with more information on the new corporate tax coming in the middle of this year.


To know more about the new corporate Tax, feel free to contact us. At Probity, we will facilitate experts ready to assist and provide you with detailed information regarding your VAT, ESR, & Corporate Tax queries. Our consultants help you segregate and make a proper corporate structure to optimize the Tax.

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