Corporate Tax
The United Arab Emirates (UAE) implemented a federal Corporate Tax (CT) system in June 2023. This new regime aims to diversify the country's revenue streams and position it as a more competitive global business hub. This guide will provide you with a comprehensive overview of the key aspects of UAE Corporate Tax.
The CT applies to most businesses and commercial activities conducted within the UAE, with a few exceptions. Here's a breakdown of who is subject to the tax:
Tiered Tax Rate System: The UAE CT features a tiered system with the following rates:
0%: Applicable to taxable income not exceeding AED 375,000 (approx. USD 102,100). This offers relief to small businesses.
9%: Standard rate applicable to taxable income exceeding AED 375,000.
15%: Applies to large Multinational Enterprises (MNEs) meeting specific criteria related to group revenue.
Exempt Persons and Activities: Certain entities and activities are exempt from CT. These include:
UAE government entities and entities wholly owned by them.
Public benefit entities meeting specific conditions.
Qualifying free zone persons earning qualifying income (refer to specific free zone regulations for details).
Extractive businesses (oil & gas) subject to separate arrangements.
According to Decision No. 3 of 2024 from the Federal Tax Authority, starting from March 1, 2024, the FTA has set forth deadlines for all businesses and taxable individuals to enroll. This enrollment pertains to all businesses (legal entities) possessing a trade license. The deadlines are staggered to allow the FTA enough time to properly evaluate applicants.
Regardless of the year of issuance of the license, the date of license issuance is taken into consideration.
Here are the deadlines for submitting a Tax Registration application:
For individuals without a license on the effective date of this Decision:
Businesses failing to submit their Corporate Tax registration applications within the specified timelines will face an administrative penalty of AED 10,000 for late registration.
The UAE's corporate tax rules are new and evolving, so it's smart to have a well-thought-out plan from the start. This will make it easier to adjust to any future changes. Since the tax landscape is constantly shifting, it's important to regularly review your strategy and get advice from UAE tax experts. By being proactive and staying informed, your business can handle the complexities of UAE corporate taxes.