Corporate Tax In Uae

• The UAE introduced its first federal Corporate Tax (CT) regime, effective from financial years starting on or after June 1, 2023.
• This marks a shift from the UAE’s traditional tax-free environment, aligning with international tax standards to strengthen its economic framework.
• Key Features of the UAE Corporate Tax Law:
• Tax Rates:
• 0% Rate: Applies to taxable income up to AED 375,000 and qualifying income of Qualifying Free Zone Persons (QFZP).
• 9% Rate: Applies to taxable income exceeding AED 375,000 and non-qualifying income of QFZP.
• Legislative Framework: The Corporate Tax Law was established under Federal Decree-Law No. (47) of 2022, published on December 9, 2022, aiming to provide clarity and ease of understanding with minimal compliance burdens for businesses and investors.
• Taxable Persons: Corporate tax applies to:
• UAE companies: Juridical persons incorporated or effectively managed in the UAE.
• Non-resident entities: Those with a permanent establishment in the UAE.
• Natural persons: Individuals conducting business activities in the UAE.
• Exemptions: Certain entities are exempt from corporate tax, including:
• Government entities and controlled entities.
• Extractive businesses (oil and gas).
• Qualifying public benefit entities and investment funds.
• Wholly-owned subsidiaries of exempt entities.
• Compliance Requirements: Businesses must:
• Register for corporate tax and file returns annually.
• Maintain adequate records for at least seven years.
• Prepare audited financial statements in line with International Financial Reporting Standards (IFRS), if applicable.
• Filing and Payment: Corporate tax returns must be filed within nine months after the end of the relevant financial year. For companies with a fiscal year ending December 31, the first return will be due by September 30, 2025, with any payable tax also due within this timeframe.