Corporate Income Tax

Corporate Tax in UAE
Corporate Tax in UAE

Scope

CT will only apply to following type of businesses (not applicable on individual):

  • all businesses and individuals conducting business activities under a commercial licence in the UAEfree zone businesses (The UAE CT regime will continue to honour the CT incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business set up in the UAE’s mainland.)

  • Foreign entities and individuals only if they conduct a trade or business in the UAE in an ongoing or regular manner

  • Banking operations

  • Businesses engaged in real estate management, construction, development, agency and brokerage activities.

Exemptions

  • Businesses engaged in the extraction of natural resources are exempt from CT as these businesses will remain subject to the current Emirate level corporate taxation.

  • Dividends and capital gains earned by a UAE business from its qualifying shareholdings will be exempt from CT.

  • Qualifying intra-group transactions and reorganizations will not be subject to CT, provided the necessary conditions are met.

Rate of tax

  • 0% for income upto AED 375,000

  • 9% for income above AED 375,000

What is it mean for businesses?

When the tax becomes effective?

The UAE CT regime will become effective for financial years starting on or after 1 June 2023.

Examples:

A business that has a financial year starting on 1 July 2023 and ending on 30 June 2024 will become subject to UAE CT from 1 July 2023 (which is the beginning of the first financial year that starts on or after 1 June 2023).

A business that has a (calendar year) financial year starting on 1 January 2023 and ending on 31 December 2023 will become subject to UAE CT from 1 January 2024 (which is the beginning of the first financial year that starts on or after 1 June 2023).

Whether Free Zone Entity required to pay tax?

Free zone businesses will be subject to UAE CT, but the UAE CT regime will continue to honour the CT incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE.

A business established in a free zone will be required to register and file a CT return.

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