Corporate Tax in UAE

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The Ministry of Finance introduce CORPORATE TAX at 9% throughout UAE for financial years commencing on or after 1st June, 2023. This tax rate is one of the best competitive tax rate all over the world.

Corporate Tax was introduced to prevent harmful tax practices and also to place UAE on the world map for TAX transparency. While entrepreneurs keep expanding and starting their entities in UAE it is necessary for them to understand the implication of UAE corporate TAX in their business. OneClik Business Setup services LLC FZ can assist you confidently navigate the CORPORATE TAX rules and regulations while finding the right solution for your company.

What is Corporate Tax in UAE?

Corporate Tax in UAE is a direct TAX levied on the additional profit after reaching a certain threshold by an entity.

If your business works around the fiscal year, corporate tax will be applied from 1st June, 2023.
If your business works around the calendar year, corporate tax will be applied from 1st January, 2024.

Corporate Tax Rates

0% for annual taxable profit up to AED 3,75,0000–For Taxable person and Qualifying Income of Free zone Persons.
9% for annual taxable profit exceeding AED 3,75,0000–For Taxable person and Non Qualifying Income from Free zone Persons.

Who are Taxable Persons in UAE?

Residents in the UAE

Natural persons conducting booking in UAE
Juridical person including a Free Zone
Foreign juridical person managed and controlled in UAE
Any other person as may be specified

Non–Residents in UAE

Permanent establishment in UAE
UAE sourced income
Nexus in the UAE

Exempt person from UAE Corporate Tax

Automatic Exemption–Corporate Tax Registration not required

Government Entities
Government Controlled entities
Extractive and Non–extractive natural resource business

Exemption against Application–Corporate Tax Registration require

Public pension or social security fund
Private pension or social security fund
Qualifying Investment fund

Small businesses with revenue below a certain threshold can claim SMALL BUSINESS RELIEF and can be treated as having no taxable income during the relevant tax period.

Qualify Income for Free zones

The Free Zone person needs to meet all the following conditions in order to qualify for 0% Corporate Tax Rate-

Derives qualifying income
Maintains adequate substance in UAE
Complies with all transfer pricing regulations
Has not elected to be subject to Corporate Tax in UAE
Meets any other conditions as may be prescribe by the MOF

Audited Financial Statement Maintenance Requirement

Qualifying Free zone
Taxable Person whose annual turnover is more than 50 million dirham

The tax payer should be attentive to maintain proper documentation from Corporate tax Perspective, should be ready of their operations to manage the compliances and reporting obligations for the corporate tax law and review their activities and assess the impact of their business for the new corporate tax law in UAE.

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