Corporate Tax in Dubai from 1st June 2023
The UAE government issued a new decree regarding the implementation of Corporate Tax services in Dubai on 09 December 2022. The Corporate Tax in Dubai Law is effective for financial years starting on or after 1 June 2023. The new tax regime is introduced to further strengthen UAE’s position as a global business hub and achieve its strategic objectives to aid development and transformation. Also, the corporate tax law intends to meet international standards of the tax system and avoid tax evasion and harmful tax practices. It is essential for businesses in UAE to understand the concepts of the updated tax policies.
What Is Corporate Tax?
Corporate tax in Dubai is a form of direct tax imposed on the profit or net income of corporations and other business entities in the UAE which is commonly called Corporate Income Tax or Business Profits Tax. Corporate Tax in Dubai requires businesses to pay a certain percentage of their profit as taxes.
Who Should Pay Corporate Tax?
- UAE companies and other juridical persons that are incorporated or effectively managed and controlled in the UAE
- Natural persons who conduct a Business or Business Activity in the UAE as specified in a Cabinet Decision to be issued in due course
- Non-resident juridical persons that have a Permanent Establishment in the UAE
All businesses with a taxable profit of more than 375,000 AED are subjected to corporate tax. The rate of corporate tax is 9% of the net profit made by the businesses. UAE has intended to support small businesses and start-ups with a ‘0’ % tax if the net profit is up to 3,75,000 AED.
Corporate Tax Exemptions In UAE
Businesses that exceed the profit threshold of 3,75,000 AED are expected to pay corporate tax in UAE. However, certain types of business or income are exempt from corporate tax requirements.
- Individuals are not subject to UAE corporate tax. Personal income is exempted from corporate tax
- Corporate does not apply to foreign investors who do not conduct business activities in UAE
- Free zone businesses that comply with the regulatory requirements will continue to enjoy corporate tax incentives
- Capital gains and dividend income received by UAE companies from their qualifying shareholdings
- Profits from qualifying intragroup transactions and restructurings
Corporate Tax in Dubai Rates
As per the Ministry of Finance, the percentage of corporate tax is as follows:
- 0% for taxable income up to AED 375,000
- 9% for taxable income above AED 375,000
- 0% for qualifying income that meets the qualifying free zone income
- 9% for taxable income that does not meet the qualifying income definition
MAATS Services in Corporate Tax
Since the announcement, corporate tax services in Dubai has created a little hassle among businesses and professionals. MAATS, the best accounting firm in Dubai helps businesses comply with the new corporate tax system by providing support and guidance to smoothly adapt to the updated tax policies. We have professional services in corporate tax registration, corporate tax planning, corporate tax advisory services, and corporate tax accounting. Our team of expert and experienced tax consultants offers regular updates, clears all queries, and takes care of any complications while you focus on your business.
