Corporation Tax UAE Overview

The United Arab Emirates (UAE) introduced federal corporate tax (CT) for the first time, effective June 1, 2023. Here are the key details:

1. Corporate Tax Rate

 Taxable income up to AED 375,000 (to support small businesses and startups).

9%: Taxable income above AED 375,000.

5%: For large multinational enterprises (MNEs) that meet the OECD Pillar Two requirements (i.e., global revenues exceeding EUR 750 million).

2. Who is Subject to Corporate Tax?

UAE-based companies (including free zone companies with mainland business).

Foreign companies with a permanent establishment (PE) in the UAE.

Individuals engaged in business activities subject to licensing.

Free zone businesses (may continue to enjoy 0% tax if they meet qualifying income conditions).

3. Exemptions

Certain entities are exempt, including:

Government entities & government-controlled entities.

Extractive and non-extractive natural resource businesses.

Public benefit organizations (if registered).

Qualifying investment funds & pension funds.

4. Free Zone Companies

Can continue to enjoy a 0% corporate tax rate on qualifying income (yet to be fully defined).

Income from business with mainland UAE may be taxed at 9%.

5. Other Key Points

No tax on personal income, dividends, capital gains, or real estate income (unless tied to a business).

No withholding tax on payments to non-residents.

Tax losses can be carried forward to offset future profits.

Transfer pricing rules apply based on OECD guidelines.

Would you like help with specific aspects, such as compliance, exemptions, or filing procedures?