Introduction to Corporate Tax in UAE

1. Introduction to Corporate Tax in UAE What exactly is corporate tax (CT)? Corporate tax is a type of direct tax applied on the net income or profit of companies and other businesses. CT Objectives The UAE hopes to accomplish the following by implementing the CT: -consolidate its position as a premier global business and investment centre -accelerate its development and transformation to fulfill its strategic goals -reaffirm its commitment to following international tax transparency requirement -eliminating damaging tax practices Scope CT will be applied to: -All enterprises and persons undertaking commercial operations in the UAE -Free zone businesses (The UAE CT regime will continue to honor the CT incentives now being granted to free zone businesses that comply with all regulatory requirements and do not do business in the UAE's mainland.) -Foreign businesses and people are only recognized if they undertake continuing or regular trade or commerce in the UAE. -Banking activities -Companies involved in real estate management, building, development, agency, and brokerage. Exceptions to CT

2. The regulations for corporation tax exemptions are outlined below. -Natural resource extraction enterprises are excluded from CT since they will continue to be subject to Emirate-level corporate taxation. -Dividends and capital gains earned by a UAE company from eligible shareholdings would be tax-free. -If the relevant circumstances are satisfied, qualifying intra-group transactions and reorganizations will not be subject to CT. Furthermore, CT will not apply to: -an individual's salary and other employment income, whether from the public or private sector -interest and other income earned by an individual from bank deposits or saving schemes -a foreign investor's income earned from dividends, capital gains, interest, royalties, and other investment returns -investment in real estate by individuals in their personal capacity -dividends, capital gains, and other income earned by individuals from owning shares or other securities in personal capacity CT Rate According to the Ministry of Finance, CT rates are as follows: - 0% for taxable income up to AED 375,000. - 9% for taxable income above AED 375,000; and - a different tax rate (not yet specified) for large multinationals that meet specific criteria set in reference to the OECD Base Erosion and Profit Shifting Project's "Pillar Two." For more visit: https://finjurisglobal.ae/