UAE backs corporate tax amid reform frenzy

The UAE government will impose corporate tax from June 2023, with companies posting a profit of AED 375,000 per year subject to a 9% tax.

Corporate tax will apply to all businesses and individuals conducting business in the UAE under a business license and free zone businesses (the UAE CT regime will continue to honor the CT incentive requirements currently offered to free zone businesses that comply with all regulatory requirements and do not operate in the UAE mainland business.)

In addition, duties will only be imposed on foreign entities and individuals when they conduct trade or business in the UAE on a continuous or regular basis.

“The introduction of the corporate tax aims to help the UAE achieve its strategic goals and accelerate its development and transformation,” said a statement from the authority.

duty free

Businesses engaged in the extraction of natural resources are exempt from tax, as these businesses are still subject to the prevailing emirate-level corporate tax.

In addition, dividends and capital gains received by UAE businesses from their qualifying equity interests will be exempt from taxation. Likewise, qualifying intra-group transactions and restructurings will not be taxed, provided the necessary conditions are met.

Corporation tax does not apply to personal income, wages and other employment income, whether earned from the public or private sector

Additionally, there is no taxation on interest and other income earned by individuals from bank deposits or savings plans.

In addition, income earned by foreign investors from dividends, capital gains, interest, royalties and other investment returns is also exempt.

Individuals who invest in real estate in their personal capacity are also not taxed, nor are dividends, capital gains, and other income earned by individuals who own stocks or other securities in their personal capacity.

The UAE government appears to be rolling out a series of reforms to shore up its economy. Authorities are also considering a tax on overcrowded housing estates. A campaign in this regard will be launched in the coming months, at which time a Dh1 million fine will be imposed on violators.