Corporation Tax

As a business proprietor in the UAE, it is crucial to remain updated on the constantly changing taxation landscape. The notable introduction of the Federal Corporate Tax on net profits for businesses signifies a substantial change. This guide explores the details of Corporate Tax in Dubai, providing insights into the legislation, tax rates, and the crucial process of corporate tax registration.

The Federal Decree-Law No. (47) of 2022, known as the “Corporate Tax Law,” emerged on December 9, 2022. This legislation serves as the bedrock for the introduction and execution of a Federal Corporate Tax across all emirates. The implementation date, either July 1, 2023, or January 1, 2024, hinges on the business’s financial year.

Corporate Tax applies universally to all companies and businesses in the UAE, irrespective of their legal structure or activity. This encompasses onshore and free zone companies, along with branches and permanent establishments of foreign entities.

a. Calculating Corporate Tax

The tax computation is based on a business’s net profits, defined as total revenue minus allowable deductions. The tax rates stand as follows:

• 0% for taxable income up to and including AED 375,000 (pending Cabinet Decision confirmation)
• 9% for taxable income surpassing AED 375,000

Qualifying Free Zone Persons enjoy 0% tax on qualifying income and 9% on income outside the qualifying definition.

b. Understanding Qualifying Free Zone Persons

Entities meeting specific criteria qualify for favorable tax treatment:

• Incorporated in a UAE free zone with a valid commercial license
• Engaged in trade or business within the free zone
• Minimum 51% ownership by UAE nationals or entities wholly owned by them
• Minimum 250 employees or a minimum annual operating expenditure of AED 50 million

Partnering with BCA GL Middle East

In the era of corporate tax in the UAE, a reliable tax partner is indispensable. BCA GL Middle East offers a spectrum of services:

• Corporate tax compliance: Ensure adherence to regulations, covering registration, filing, and payment.
• Tax planning: Minimize tax liability through effective planning and structuring.
• Tax advisory: Stay abreast of corporate tax law developments with ongoing advisory services.