Corporate tax

Companies will be subject to UAE corporate tax from the start of their first financial year beginning on or after June 1, 2023.

Corporate tax exemptions

• Companies engaged in the extraction of natural resources are exempt from tax, as these companies will continue to be subject to the current corporate taxation in the UAE.
• Dividends and capital gains earned by a UAE company from its qualifying shareholdings are exempt from tax.
• Qualifying intra-group transactions and restructurings are not subject to tax, provided the required conditions are met.

In addition, CT does not apply to

• Salaries and other employment income of a natural person, regardless of whether derived from the public or private sector
• Interest and other income of a natural person from bank deposits or savings schemes
• Income of a foreign investment from dividends, capital gains, interest, royalties and other investment returns
• Investments in real estate by natural persons in their personal capacity
• Dividends, capital gains and other income of individuals from holding shares or other securities in their capacity as private individuals.

Corporate tax rate

• 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 multinational companies that meet certain criteria.

Objectives of corporate tax

With the introduction of the tax, the UAE aims to:

• Consolidate its position as a leading global hub for business and investment
• Accelerate its development and transformation to achieve its strategic objectives
• Reaffirm its commitment to meeting international standards for tax transparency and preventing harmful tax practices.

Scope of corporate tax

All companies and individuals conducting business in the UAE under a commercial licence:

• Companies in free zones (the UAE CT regime will continue to take into account the CT incentives currently
• offered to companies in free zones that meet all regulatory requirements and that do not conduct business activities on the UAE mainland).
• Foreign companies and individuals only if they conduct trade or business in the UAE on an ongoing or regular basis
• Banking
• Companies operating in the areas of property management, construction, development, representation and brokerage.