[World Tax News] UAE introduces 9% Corporate & Business Tax and more

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  • Last Updated on 17 December, 2022

UAE Corporate and Business Tax

Editorial Team – [2022] 145 taxmann.com 411 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. United Arab Emirates (UAE) introduces a 9% Corporate and Business tax regime

The Ministry of Finance, United Arab Emirates (UAE), published Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law) on 9th December 2022. This decree intends to levy direct taxes on the income or profit of Corporations and Businesses.

This regime will be applicable for the tax period commencing on or after 1st June 2023. Where the financial year of a business starts on 1st January 2023 and ends on 31st December 2023, the regime will be effective from 1st January 2024.

The decree law imposes a tax on the following persons:

(a) Legal person incorporated under any law in UAE;

(b) Legal person incorporated outside UAE but effectively managed and controlled in UAE;

(c) Legal persons incorporated outside UAE having a permanent establishment in UAE; and

(d) Natural person conducting any business activity in UAE (directly or indirectly through an unincorporated partnership or proprietorship).

The entities engaged in the extraction of UAE’s natural resources and certain non-extraction activities will be exempt from this decree. However, the Emirate-level tax will be applicable, subject to certain conditions.

The corporate tax will apply to individuals and legal persons at the rate of 0% if the taxable income does not exceed AED 375,000 and at the rate of 9% if the taxable income exceeds AED 375,000. The taxable income for tax purposes will be the accounting profits of the business subject to some deductions as provided in the law.

Further, the businesses will be subject to tax on the global income except for dividend income and capital gains meeting certain conditions. Also, an exemption is allowed for profits obtained by foreign branch offices that are subject to tax overseas at the rate of 9% or more.

Source: Federal Decree-Law No. (47) of 2022

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