1. What is corporate tax in UAE?

Corporate tax is a form of direct tax levied on the net income or profit of corporations and other business entities. It is also commonly known as ‘Corporate Income Tax’ or Business Profits Tax.

2. Who should pay corporate tax in the UAE?

All the businesses whose taxable profit (net) is more than 375,000 AED fall under the purview of corporate tax and are required to pay a certain percentage of net profit as corporate tax.

3. What is the rate of corporate tax in the UAE?

The corporate tax rate is at 9% of the net profit made by the businesses. In order extent support to small businesses and start-ups, the corporate tax rate will be ‘0’ % if the net profit is up to 3,75,000 AED

4. What is the date of implementing the federal corporate tax in UAE?

The date of implementing the corporate tax is effective from the financial year starting on or after 1st June, 2023.

5. When will the corporate tax law be released by the authorities?

The authorities already released the corporate tax law on 9th December 2020. The UAE corporate tax is made available through a ‘Federal Decree-Law no. 47 of 2022 on their official website.

6. What are the businesses or incomes that are outside the scope of corporate tax?

Given the profit threshold of 375,000 AED, all businesses that exceed the threshold have to pay the corporate tax. Below is the list of companies or income exempt from corporate tax:

· income from employment, real estate, investments in shares, and other personal income unrelated to a trade or business in the UAE will be exempt from corporate tax.

· Not applicable to foreign investors who do not carry out business in UAE.

· Corporate tax incentives are currently being offered to free zone businesses that comply with all regulatory requirements will continue.

· Capital gains and dividends received by UAE businesses from its qualifying shareholdings are exempt from corporate tax.

· Not applicable on qualifying intragroup transactions and restructurings.

7. How is corporate tax in UAE calculated?

For example, If the net profit is 475,000 AED, the corporate tax will be 9000 AED (475,000-375,000 X 9/100)

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