UAE Corporate Tax — Overview

UAE Corporate Tax Law

Corporate Tax has arrived to the UAE!

By virtue of the UAE Federal Decree Law №47 of 2022 on the Taxation of Corporations and Businesses. Otherwise known as the #uaecorporatetax #law

At a high level, Corporate Tax is a form of tax levied on the:

1) Taxable Income

2) of #Taxable Persons.

Taxable Persons, in turn, may either be:

1) Legal persons or

2) Natural persons.

The #corporatetax rate is 9%. And the Corporate Tax threshold is AED 375,000.

Taxable Persons will become subject to Corporate Tax from the beginning of their 1st financial year, that starts on or after 1st of June 2023.

Therefore, all Taxable Persons must register and obtain a Tax Registration Number for Corporate Tax purposes, from the applicable date.

Corporate Tax Registration

Corporate Tax registration in the U.A.E. has become available as of May 15, 2023.

The registration is done through the EmaraTax platform, launched by the UAE Federal Tax Authority or FTA.

At present, the registration is open for:

1) Private companies and

2) Public Joint Stock Companies.

For #freezones however, Corporate Tax Registration will be made available at a later stage.

Similarly, registration for other categories of Taxable Persons, such as natural persons conducting #business or Business Activity, will be open later.

Among other things, EmaraTax platform integrates entities such as:

1) the UAE Central Bank and

2) UAE PASS, to streamline user experience.

According to the authorities, EmaraTax is meant

1) to be intuitive,

2) easy to navigate and

3) with self-help options.

It will also be available on mobile soon.

The UAE Corporate Tax registration is in line with the UAE Federal Decree Law №47 of 2022 on the Taxation of Corporations and Businesses. Otherwise known as UAE Corporate Tax Law.

Corporate Tax Obligations

Corporate Tax in the UAE is now part of the country’s legislative framework.

At a high level, some of the most important aspects of the UAE Corporate Tax to know are as follows.

First, Taxable Persons include all #legal entities, across the UAE, including free zones.

Also, Taxable Persons can all include natural persons, such as freelances, if they meet qualifying Taxable Income.

This means that all Taxable Persons, irrespective how big or small, have to register with the #Federaltax Authority.

Furthermore, all Taxable Persons, no matter what their annual income may be, will also have to submit annual tax return to the #fta

However, only those Taxable Persons who meet the minimum threshold of AED 375,000, will have to pay the 9% Corporate Tax Rate.

Except those Small Businesses, with revenues below AED 3 mil, who apply for the Small Business relief.

Finally, Taxable Persons will become subject to Corporate Tax, from the beginning of their 1st financial year, that starts on or after 1st of June 2023.

Therefore, all Taxable Persons must register and obtain a Tax Registration Number for Corporate Tax purposes.

This is in accordance with the UAE Federal Decree Law №47 of 2022 on the Taxation of Corporations and #businesses

As well as the subsequent regulations, further qualifying the parameters of the UAE Corporate Tax Law.

UAE Corporate Tax Rate & Threshold

Corporate Tax rate in the UAE is 9%. And it applies to Taxable Persons, legal or natural, with the income threshold of AED 375,000, per year.

This means that the Tax is levied on the portion of income?exceeding?AED 375,000.

For example, if a taxable company’s income is AED 400,000, Corporate Tax is only levied at 9% on AED 25,000.

Which is the difference between the minimum threshold of AED 375,000 and the businesses income of AED 400,000.

The Corporate Tax in the UAE is governed by the UAE Federal Decree Law №47 of 2022 on the Taxation of Corporations and Businesses.

As well as subsequent regulations and decrees. Otherwise known as the UAE Corporate Tax Law.

By way of reminder, Taxable Persons will become subject to Corporate Tax from the beginning of their first financial year, that starts on or after 1st of June 2023.

Corporate Tax Relief for Small Businesses

There is a Corporate Tax relief for #smallbusiness in the UAE, to ease the burden on small businesses.

Specifically, Taxable Persons whose income is below?AED 3 mil,?for each reportable period, are not be subject to the 9% Corporate Tax Rate.

As long as, they are not Qualifying Free Zone Persons or members of #multinationals #enterprises Groups, as defined in Cabinet Decision №44 of 2022.

To benefit from this, qualifying businesses must apply for the relief, during the applicable tax periods.

The Small Business Corporate Tax Relief was introduced by virtue of the UAE Ministerial Decision №73 of 2023.

Which further clarifies the parameters of the UAE Corporate Tax Law, being the Federal Decree Law №47 of 2022.

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