Introduction to Corporate Tax in UAE

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Introduction to Corporate Tax in UAE
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What Exactly is Corporate Tax (CT)?Corporate
tax is a type of direct tax applied on the net
income or profit of companies and other
businesses.
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CT ObjectivesThe UAE hopes to accomplish the
following by implementing the CT- consolidate
its position as a premier global business and
investment centre- accelerate its development
and transformation to fulfill its strategic goals
- reaffirm its commitment to following
international tax transparency requirement -
eliminating damaging tax practices
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ScopeCT will be applied to- All enterprises
and persons undertaking commercial operations in
the UAE - Free zone businesses (The UAE CT
regime will continue to honor the CT incentives
now being granted to free zone businesses that
comply with all regulatory requirements and do
not do business in the UAE's mainland.)-
Foreign businesses and people are only recognized
if they undertake continuing or regular trade or
commerce in the UAE.- Banking activities-
Companies involved in real estate management,
building, development, agency, and brokerage.
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Exceptions to CTThe regulations for corporation
tax exemptions are outlined below.- Natural
resource extraction enterprises are excluded from
CT since they will continue to be subject to
Emirate-level corporate taxation.- Dividends
and capital gains earned by a UAE company from
eligible shareholdings would be tax-free.- If
the relevant circumstances are satisfied,
qualifying intra-group transactions and
reorganizations will not be subject to CT.
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Furthermore, CT will not apply to- an
individual's salary and other employment income,
whether from the public or private sector -
interest and other income earned by an individual
from bank deposits or saving schemes - a
foreign investor's income earned from dividends,
capital gains, interest, royalties, and other
investment returns - investment in real estate
by individuals in their personal capacity -
dividends, capital gains, and other income earned
by individuals from owning shares or other
securities in personal capacity
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CT RateAccording to the Ministry of Finance, CT
rates are as follows- 0 for taxable income up
to AED 375,000. - 9 for taxable income above
AED 375,000 and- a different tax rate (not yet
specified) for large multinationals that meet
specific criteria set in reference to the OECD
Base Erosion and Profit Shifting Project's
"Pillar Two."
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Contact
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