Overview of the Federal Corporate Tax in UAE

 Federal Decree-Law No introduces Corporate Tax in UAE. (47) of 2022 on December 9, 2022. The announcement clears that corporate tax law would be implied on UAE taxable income on or after June 1, 2023.

The authority's announcement states that UAE Corporate Tax law would cover all businesses and commercial activities. Still, a few moves, such as natural resource extraction, would be treated differently at the emirate level corporate tax rule.

After the announcement of starting the UAE corporate tax 2023 has created chaos among business owners and tax specialists. Although UAE is not the first GCC country to introduce the federal corporate tax, now Bahrain is the only GCC country without any corporate tax rate.

As corporate tax law in the UAE is a new announcement, businesses must understand it clearly. Here we have tried to simplify answers to some commonly asked questions about UAE corporate tax.

What is Corporate Income tax in UAE?

UAE Corporate tax is a direct excise applicable on businesses' profitable income after a set threshold set by government authorities. The other names of this tax are "Corporate Income Tax" and "Business Profit Tax."

Corporate Tax Rate UAE?

The UAE Federal authority announced the UAE Corporate Tax rate and would start on and after June 1, 2023. The following rates are mentioned till the date of this publication:

Taxable Income Criteria	Corporate Tax Rate
Profitable income under the amount of 375,000 AED	0%
Qualifying Free zone person’s Qualifying Income	0%
Profitable income after the threshold of 375,000 AED	9%
Qualifying Free zone person’s Non-Qualifying Income	9%

Is free zones businesses' income covered by Corporate Tax?

As Free zone income is subject to qualifying income, it still needs to be clarified for the general public if free zone companies would have to pay CT in UAE. The above table states that CT would be 0% on Free zones qualifying income and 9% on Non-Qualifying income.

Businesses must connect with financial experts to determine which income would fall into the qualifying income criteria.

Ease Corporate Tax Evolution Start with Avyanco Corporate Experts

As we all know, this is a whole new era of businesses in the UAE after the implementation of CT. The expert auditors can provide the correct information to make your transition easy and seamless.

Avyanco Corporate Services is a one-stop solution for business persons either running their business in UAE or planning a startup here. It will help your business if you start corporate assessments as early as possible because delaying it can cause high tax bills.

Contact our auditors for early planning of corporate tax UAE and navigate your organization towards this new landscape. Early planning is crucial to avoid last-minute deadlines.

Source URL: https://sites.google.com/view/corporatetaxuae/corporate-tax-uae