On December 9, 2022, the United Arab Emirates (UAE) promulgated the Federal Law on Corporate and Business Taxation.
Federal Decree No. 47 of 2022 on Taxation of Companies and Businesses provides the legal basis for the introduction and implementation of the federal corporate tax regime in the UAE.
Under this regime, corporate tax is levied at the headline rate of 9% on taxable income in excess of AED 375,000. Taxable income below this threshold is subject to a zero percent corporate tax rate.
The new corporate tax regime will apply from fiscal years beginning June 1, 2023.
According to the Ministry of Finance, “the introduction of the corporate tax regime aims to help the UAE achieve its strategic objectives and accelerate its development and transformation. Tax certainty, coupled with the UAE’s extensive network of double taxation treaties, will solidify the UAE’s position as a leading jurisdiction for business and investment.”
“Given the UAE’s status as an international business hub and global financial centre, the UAE corporate tax regime is built on global best practices and incorporates internationally known and accepted principles. This will ensure that the UAE corporate tax regime is easily understood and its implications are clear.”
Details of the law are available on the Ministry’s website.