The UAE Government has issued Federal Decree Law of 47 of 2022 on taxation of corporations and businesses in December 2022 which will be effective from 1st June 2023.
This new corporate tax is a direct tax and is to be levied on net business profit. Primarily, resident companies, natural persons conducting business activity and non-resident entities having permanent establishment in UAE will be subject to the UAE corporate tax with the following rates:
If Net Profit below 375,000 AED (approx. 93,750 Eur) = 0%
If Net Profit above 375,000 AED (approx. 93,750 Eur) = 9%
UAE Corporate Tax vs Free Zone entities
The UAE Government has announced special benefit to Free zone entities in the UAE where the free zone entities will need to pay 9% corporate tax only on their net profit derived from business with mainland entities and businesses thus excluding from taxation their profit from business with other free zone entities and foreign business partners outside of the UAE. There are several technicalities involved such as qualifying, non-qualifying income etc., hence for more details on this topic pls see and read our special articles in our Blog section.
Furthermore, there are several tax reliefs and exemptions that have been adopted to make the introduction and operation of the new corporate tax as smooth as possible. You can find the information about them in our special articles. Check out our Blog section.
Despite the reliefs and exemptions, the corporate tax registration and return filing will be mandatory for all entities whether mainland or free zone businesses. Due date for corporate tax return filing and payment will be nine (9) months following the tax period.
Get ready for this major tax change. Is it related to your company? Drop us an email (office@alphaprimedwc.ae) or give us a call (+971 58 515 2374) to know more about the UAE Corporate Tax.
