5 things to know about UAE corporate tax

The UAE is all set to commence the corporate tax system with effect from 01st June 2023. The orders in this regard have already been promulgated. Further, the systems for monitoring, calculating, and analyzing corporate tax collection are being established across the board. Every change in the socioeconomic environment brings new opportunities. Successful are those, who can identify the change coming and act accordingly. In line with the expected rise in job prospects, aspirants have been joining UAE corporate tax training in Dubai since the announcement of the UAE corporate tax.

Note that, the UAE is not the first country to introduce the corporate tax, but the 4th one it is. The 9% corporate tax is expected to strengthen the economy of the country and maintain the fiscal condition in the coming times

There are a few basic questions that every business person, start-up owner, and the person thinking to establish a business in UAE has been asking. This blog would help aid in getting a clear idea about the UAE corporate tax concept. We suggest you join UAE corporate tax training in Dubai, to use the new tax regime to your benefit.

The five (05) things to know about UAE corporate tax are elaborated on here.

1. What is the UAE corporate tax?

UAE corporate tax is a direct tax on profit-making organizations and businesses. It is also called a business profit tax. Companies in the UAE have to pay 9% of their net profit as UAE corporate tax in every fiscal. At the same time, the subject tax is applicable to businesses that earn a net profit of AED 3, 75,000 and above only. The CT is scheduled to commence on 01st Jun 2023.

2. What is the law governing corporate tax in UAE?

The Federal Decree-Law No. 47 of 2022 stipulates the regulations regarding corporate tax. The policies and specific directives as per the subject law were publicized on 09 December 2020. It is also available on the official website of the Ministry of Finance of the UAE. People wanting to know more about the tax regulations according to CT can download and go through it. The UAE corporate tax training in Dubai would cover all the aspects concerning the said tax.

3. Is the UAE corporate tax binding on all businesses in the country?

No, the UAE corporate tax is not a carpet regulation that has to be followed by all businesses in the country. The threshold for the net profit is AED 375000 annually. Only those businesses that receive a profit of AED 375k or above need to pay the tax. Even then, the following exemptions are there:

  • No corporate tax for individual earnings, even if it is from trading or business.
  • Ex-pat investors not involved in business in the UAE do not have to pay corporate tax.

4. How much is the corporate tax in UAE for free zone companies?

The corporate tax incentives offered to free zone companies will continue after 01st June 2023 as well. It is an advantageous thing for businesses in the free zone jurisdiction.

5. Are capital gains and dividends from shares subject to corporate tax?

No, there is no corporate tax for capital gains and dividends from shareholdings in companies. Even if the dividend or capital gain is credited to the business’s account, the same is exempted from corporate tax.

The Tail End

Even though the authorities have clearly promulgated the regulations and policies regarding UAE corporate tax, still ambiguities exist concerning many elements of the law. It would require in-depth study and analysis for people to understand how CT works and which way they can reduce the liabilities. UAE Corporate Tax Training in Dubai covers all these concepts comprehensively. Therefore, the training is useful for both corporates and job seekers.

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