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ABU DHABI, 31st January, 2023 (WAM) — The Ministry of Finance, MoF, has issued Cabinet Decision No. 116 of 2022 on the approval of applicable taxable thresholds for corporate tax.
The decision follows the publication of the Federal Decree on Taxation of Companies and Corporations (“Corporate Tax Act”) in December 2022.
Businesses will be subject to UAE corporate tax from the start of their first financial year commencing on or after 1 June 2023.
The tax rate has been set at 9 per cent for taxable income above AED 375,000, in line with the Ministry’s earlier announcement, ensuring that the UAE’s corporate tax regime ranks among the most competitive in the world, and Strengthen the country as a global financial and business center.
According to the decision, the zero rate will apply to taxable income not exceeding AED 375,000 in the same tax period, regardless of the number of businesses or business activities carried out by the taxpayer during the period.
The 9% rate applies to taxable income exceeding AED 375,000 during the relevant tax period.
Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, said, “The Cabinet’s decision on the applicable taxable income threshold for corporate tax affirms the previously announced rates. The tax rates and thresholds were determined carefully and reflect fairness and competition in the UAE. The corporate tax system.
“The zero threshold for taxable profits below AED 375,000 demonstrates our continued support for start-ups and small businesses in recognition of their important The % taxable income rate is highly competitive and provides certainty to taxpayers, thereby reinforcing the UAE’s position as a leading jurisdiction for business and investment.”
The Cabinet Decision defines “business” as “an activity carried on by any person at any place on a regular, continuous and independent basis, such as industrial, commercial, agricultural, vocational, professional, service or excavation activities or any other related use of tangible or intangible property” , while it defines “commercial activity” as “any transaction or activity, or series of transactions or series of activities, carried out by any natural or legal person in the course of his business”.
A copy of the Cabinet decision on the applicable taxable threshold for corporate tax can be found on the official website of the Ministry: www.mof.gov.ae
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