The UAE ministry of finance has announced on the 31st January 2022 that a new Federal Corporate Tax will be introduced in the UAE.
The Federal Tax was said to take effect on 1st June 2023, for businesses who’s profits exceed AED 375,000 and will be subject to a standard statutory tax rate of 9%.
UAE CT was introduced to cement the UAE’s position as a world leading business and investment hub, meeting international standards for tax transparency, preventing harmful tax practices and accelerating the UAE’s development and transformation to achieve its strategic objectives.
Key Features according to the Ministry of Finance (MOF)
Individuals will not be subject to corporate tax income from employment, real estate, investment in shares or other personal income not related to a UAE trade or business.
No corporate tax will apply on foreign investors who do not carry in business in the UAE.
Corporate tax will apply on adjusted accounting net profit of the business.
Free Zone business that meet all the necessary requirements can continue to benefit from corporate tax incentive.
No withholding tax will apply on capital gains and dividends received by a UAE business from its qualifying shareholdings.
No corporate tax will apply on qualifying intragroup transactions and restructurings.
Foreign tax will be allowed to be credited against UAE corporate tax payable.
Generous loss transfer and utilisation rules will be available to businesses.