The United Arab Emirates has issued a decree imposing corporate tax at the rate of 9% on taxable business income exceeding 375,000 dirhams ($102,000).
This tax will apply to all businesses from June. 1 next year.
The UAE Ministry of Finance said the federal law on corporate and corporate taxation is an important milestone in building an integrated tax system that supports the UAE’s strategic objectives and strengthens its global economic competitiveness. I have confirmed that there is.
The ministry said the corporate tax was “designed in line with global best practices to encourage investment and ensure that the principles contained in the law are widely accepted and understood.”
Earnings up to the $102,000 threshold are taxed at the 0% rate to support small businesses and start-ups.
The standard tax rate of 9% ensures that the corporate tax system is one of the most competitive in the world and strengthens the UAE’s position as a global business and financial center.
There is a corporate tax exemption.
Domestic natural resource extraction activities are exempt from corporate tax. However, it remains subject to existing emirate-level taxation.
Other exemptions are available to organizations such as government agencies, pension funds, investment funds and public interest groups.
Recognizing the fundamental role of free trade zones in driving the country’s economic transformation, existing free zone entities are eligible to benefit from a 0% corporate tax rate on qualifying income.
Under the provisions of the Corporate Tax Law, corporate tax does not apply to salaries or other personal income from employment, whether derived from government, quasi-government, or private sector employment.
Interest and other personal income earned from bank deposits or savings programs are also not subject to corporate tax.