The UAE will introduce a federal Corporate Tax on business profits effective for financial years starting on or after 1 June 2023. The UAE Corporate Tax regime has been designed to incorporate best practices globally and minimise the compliance burden for UAE businesses.
Given the position of the UAE as a global financial centre and an international business hub, the UAE Corporate Tax regime will support investment and headquarters activities and ensure the free flow of capital, trade, financing, and services.
His Excellency Younis Haji Al Khoori, Undersecretary of Ministry of Finance (MoF), “As a leading jurisdiction for innovation and investment, the UAE plays a pivotal role in helping businesses grow, locally and globally. The certainty of a competitive and best in class Corporate Tax regime, together with the UAE’s extensive double tax treaty network, will cement the UAE’s position as a world-leading hub for business and investment. The introduction of a Corporate Tax regime will help the UAE achieve its strategic ambitions and incentivise businesses to establish and expand their activities in the UAE,”
With a standard statutory tax rate of 9% and a 0% tax rate for taxable profits up to AED 375,000 to support small businesses and startups, the UAE Corporate Tax regime will be amongst the most competitive in the world.
On 26 July 2021, the Ministry of Finance issued an official statement confirming the UAE’s support of the global minimum effective tax rate as proposed under “Pillar Two” of the OECD Base Erosion and Profit Shifting project. The introduction of a UAE Corporate Tax regime will provide a basis for the UAE to execute its support by applying a different Corporate Tax rate to large multinationals that meet specific criteria set with reference to the above initiative.
Businesses will have ample time to prepare for the introduction of Corporate Tax, and further information on the UAE Corporate Tax regime will be provided towards the middle of 2022 to help businesses get ready and be fully compliant.
A list of Frequently Asked Questions (“FAQs”) can be found on the MoF website https://www.mof.gov.ae/en/resourcesAndBudget/Pages/faq.aspx
Important notice:
The information on this page is meant to provide an initial introduction to the UAE Corporate Tax regime in advance of relevant legislation being finalised and promulgated. It is not intended to comprehensively address all possible aspects of the UAE Corporate Tax regime or to provide definitive answers, and should not be used for individual or business decisions as it does not represent the final legislation. Further information on the technical details and other specifics of the UAE Corporate Tax regime will be made available in due course. The information on this page is subject to change without notice.