UAE Corporate Tax

UAE (Dubai) imposed “Corporate Tax” effective from financial year starting on or after 1st of June 2023, it is a federal tax and a “Federal Tax Authority” will be responsible for its administration, collection and enforcement of corporate tax.
The corporate tax is applicable for all businesses and commercial activities other than extraction of natural resources, applicability of tax laws to individuals will be determined by the requirement of obtaining business license or permits for carrying out business, commercial or professional activity, individuals required to get permit or license will be subject to corporate tax law.

Taxable income will be determined by making certain adjustments as required by tax law, to the accounting net profit determined as per international financial reporting standards. Tax is chargeable at a rate of 9% on taxable income exceeding AED 375,000 (tax credit allowed for any foreign tax paid on such income), there is a separate tax rate for multinational.

Individuals drawing salary income, real estate investments in individual capacity, dividend capital gains or other income are not subject to CT, Individual having commercial license are subject to tax. Professional income is taxable if exceeds AED 375,000.

Dividend & capital gains income from its qualifying ownership interest in a UAE or foreign company that meets certain condition, is exempt under corporate tax of UAE. Foreign entities and individuals who carryout trading or business in UAE are subject to corporate tax, tax will not be levied on foreign investor’s income form dividend, capital gains, royalties, interests and other investment returns.

Businesses in free zones are required to be registered, and file returns under corporate tax law. Banking companies and real estate management, construction, development and agency activities will also be subject to tax. Tax losses can be carried forward and adjusted against future taxable income subject to conditions, tax losses of one group company can also be adjusted against taxable income of the other group company subject to specified conditions. A group of companies which elect to be taxed as a single entity will be treated as a single taxable person subject to certain conditions.

Single tax return is required to be filed electronically for a financial year, no provisional or advance tax returns need be filed. UAE businesses will be required to comply with transfer pricing rules and documentation requirements when entering into transaction with related parties.

Noncompliance of tax laws will be subject to penalties.