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The United Arab Emirates (UAE) on Friday enacted a corporate tax law under which companies with profits exceeding Dh375,000 will be taxed at 9 percent, harrij times reports.
The tax will apply to companies in the UAE starting from financial years beginning on or after 1 June 2023.
A threshold of Dh375,000 has been included to support SMEs and start-ups and enhance economic competitiveness.
Importantly, the report states that corporate tax will not apply to individuals’ wages or employment income. In addition, personal income derived by individuals in their personal capacity from bank deposits or savings plans, as well as real estate investments, is also not taxed, it added.
The UAE Ministry of Finance stated that the move will contribute to the creation of an integrated tax system to enhance the country’s global economic competitiveness and support the international financial system within the framework of the UAE’s established partnerships.
read more: UAE attracts billions, climbs tax haven rankings
According to the law, UAE free zone companies that meet all the conditions set out in the UAE Corporate Tax Law Enforcement Regulations will be exempt from corporate tax.
Natural resource extraction activities are also exempt, but they are subject to existing emirate taxes, the report said.
Government entities, pension funds, investment funds and nonprofits are also exempt from corporate taxation.
Corporate tax is levied on taxpayers including residents, certain non-residents and free zone persons generating profits exceeding AED 375,000 per annum.
Non-residents are also subject to 9% tax if they have a permanent establishment in the UAE and earn income from the sale of goods, rendering of services, etc. in the country.
All taxpayers are obliged to keep records and documents for seven years after the end of the tax period.
The report further said that by law, all taxpayers are required to file their annual corporate tax returns within nine months of the end of the relevant tax period.
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