New 9% UAE Corporate Tax For Profits Over AED 375,000/-, Beginning 1 June 2023

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The UAE has issued Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the “Corporate Tax Law”). This means businesses will be subject to UAE Corporate Tax (“Corporate Tax”) from the beginning of their first financial year which starts on or after June 1, 2023.

The UAE’s Corporate Tax regime will levy a standard rate of 9 percent for taxable profits exceeding Dh375,000. Profits up to and including that threshold will be taxed at 0 percent rate to support small businesses and start-ups.

Corporate tax will not be applied to salaries or other personal income from employment, whether it is earned from work in the government, semi-governmental or private sector. Interest and other personal income earned from bank deposits or savings programmes are also not subject to corporate tax, along with investment in real estate by individuals in their personal capacity.

The law has also exempted companies in some sectors from their tax liability. However, they remain subject to existing local emirate-level taxation. Other exemptions are available to organisations such as government entities, pension funds, investment funds and public benefit organisations due to their vital importance and contribution to the social fabric and economy of the UAE, a statement said. Existing free zone entities, too, will be eligible to benefit from a 0 per cent corporate tax rate on qualifying income.