The UAE to Introduce Federal Corporate TAX from June 2023


On January 31, 2022, the United Arab Emirates (UAE) announced that on June 1, 2023, it would implement the first federal corporation tax on business profits. However, the tax will stay low, at 9%, to make the country appealing to businesses. However, there is presently no corporate tax in the UAE at the federal level, but certain emirates charge a limited corporation tax on oil & gas exploration & production companies, as well as international bank branches operating in the UAE. The Gulf Arab oil exporter has long used its tax-free status to stake itself a place as a worldwide economic, energy, & tourist hotspot, attracting the world’s ultra-rich.

Most of this tax-free system remains, particularly the lack of a personal income tax. The Finance Ministry, on the other hand, stated it was implementing a business tax to better coordinate global operations. Its purpose is to prevent tax evasion & address challenges brought on by the digitalization of the global economy. According to the government, the new system would include a basic statutory tax rate of 9% as well as a 0% rate for taxable profits up to 375,000 dirhams ($102,107.50) to help small firms & entrepreneurs.

According to the report, the UAE, a regional financial centre, exempts businesses from paying taxes on capital gains & dividends obtained from shareholdings. Individual income tax exemptions, capital gains tax exemptions on real estate and other assets, & other non-business income were all preserved under the new regime. According to the ministry, the UAE corporate tax regime would continue to honour the corporate tax benefits now available to free zone enterprises that meet all regulatory criteria & that do not do business with the mainland UAE.

For many years, many UAE enterprises & branches have benefited from a 0% tax rate on revenues made in the UAE, including both free trade zones as well as on the mainland. This is about to change dramatically as a result of the recent announcements. While the appropriate law has yet to be issued, multinational companies with operations in the UAE should evaluate the implications of these developments. The ministry also said that UAE businesses will be given plenty of time to cope with the changing corporation tax’s implementation, with further information on the new corporate tax expected in the middle of this year.

Contact your tax advisor for further information. Well, if you need any help in finding the best tax advisory & consultation services, here it is ARC Associates. Being one of the best Tax consultants in UAE, we have become the first preference for anyone who wants to realize their entrepreneurial aspirations. We are a Ministry of Labour & DED-accredited company formation specialist in Dubai for business establishment in the UAE, Mainland, Offshore, Free Zone Company Formation, & LLC Company Formation in the UAE. Our knowledgeable business advisers are well-versed in the UAE’s most recent business rules & regulations. And we can manage all the complex processes flexibly & quickly to realize your business dreams as soon as possible. Such as business name registration, document attestations, managing license & visa applications, communicating with all relevant authorities, reporting back when you’re set to start trading, and so on. Prepare to launch your business dreams with us, your one & only trusted partner!