UAE announces introduction of corporate tax w.e.f. 1 June 2023: Top 10 Facts

With OECD adopting a minimum tax rate of 15%, UAE seems to have introduced Income Tax at an appropriate time, albeit at a lower rate. Let us know the key feature of the UAE corporate Tax Regime: 

1. Corporate Tax has been introduced on net income or profit of corporations and other businesses. This is a federal tax and so applicable to across Emirates.

2. There is zero tax if taxable profits are upto AED 3,75,000 (to support startups and MSMEs) and 9% tax rate if taxable profits exceeds AED 375,000.

3. It excludes business of extraction of natural resources which is subject to emirate level corporate taxation.

4. Free zone businesses will be subject to UAE Corporate tax, but the incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE, shall continue.

5. Financial Year shall be 1st July- 30th June

6. There shall be no advance tax and Withholding tax.

7. Business losses can be offset against profits of subsequent FYs. Infact, they can be offset against profits of group companies too, subject to conditions.

8. OECD TP Guidelines would be followed for transfer pricing compliances.

9. No taxation for salaried individuals, income from real estate and other investments, or any other non-business income (Dividend and Capital Gains).

10. Interestingly, the tax rate is kept at less than the global minimum tax rate of 15% to which UAE has agreed to.