UAE Federal Government has announced a new tax structure which is expected to be implemented on 1st June 2023. This Corporate Tax will be applied to each and every Emirate. The proposed tax rate is 9% on income above AED 375,000. Small businesses and entrepreneurs are kept out of the ‘taxable income’. The global income of an individual or legal entity will also come under the new tax regime which will significantly lower the invasion of tax by large corporates. The law is expected to increase transparency in the tax regime of the country.
“The UAE Corporate Tax regime will support investment and headquarters activities and ensure the free flow of capital, trade, financing, and services.” as stated in the press release of the Ministry of Finance.
Subjects of the New Law
The proposed tax will apply to all commercial and business activities. Subjects include individuals (natural persons), corporate entities and charitable organizations. The financial statements of the taxpayer will decide the tax liability. The group entities are not required to file separate tax returns for every individual. The provision for a tax credit is also present which will be applicable in case of double taxation (when taxable in both UAE and abroad).
Some Exemptions:
- When a foreign individual (or entity) is not regularly trading or conducting business in UAE,
- When you draw income from the extraction of natural resources,
- When you are a ‘qualified’ foreign investor who receives dividends or capital gains via investments in UAE,
- When you are qualified for intra-group transactions and reorganizations.
- Any other qualifications provided in the proposed structure.
Date of implementation:
The expected date of implementation is, on or after, 1st June 2023 under the heading “Corporate Income Tax”. Businesses having a financial year from 1st January 2023 to 31st December 2023 will be liable for corporate tax from 1st January 2024.
conclusion
The tax structure also provides for the registration of a taxpayer and the process of tax return filing. The FTA is given the power to review the corporate tax return and issue an assessment.
We, CORPORATE TAX are always there to answer your legal queries regarding new laws and Government notifications. Our Tax lawyers in Dubai handle a wide spectrum of domestic and cross-border litigation. For free legal consultation in Dubai, contact us at info@bsb.legal or call us at +97150 8014003.