The United Arab Emirates (UAE) will introduce a corporate income tax at the federal level on business profits, effective for fiscal years beginning on or after June 1st, 2023. In addition to the standard corporate income tax rate of 9%, the UAE tax regime will remain one of the most competitive tax regimes in the world, with a corporate tax rate of 0% to be applied for businesses with a taxable income of up to AED 375,000 to support small businesses and start-ups.
On July 26th, 2021, the Ministry of Finance of UAE issued an official statement declaring its support for the OECD's implementation of the global minimum effective tax rate proposed under the Base Erosion and Profit Shifting (BEPS) project. By implementing corporate income tax regime nationwide, the UAE aimed to provide a basis for its support on the application of taxes at different rates to large multinationals that meet certain criteria.
Therefore, the CIT rates will be:
Free zone businesses will be subject to UAE CIT and be required to register and file a CIT return. However, the UAE CIT regime will continue to honor the CIT incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE.
In order to help businesses be prepared and fully compliant with the new corporate income tax application, details on the implementation of the new regime will be shared by the UAE Ministry of Finance towards the middle of 2022.
NAZALI TAX & LEGAL