Corporate Tax Rates:
The following categories of income will not be subject to CIT:
Transfer Pricing rules and documentation requirements will now be aligned with the OECD Transfer Pricing Guidelines i.e., Master File and Local File. Documentation will require groups of companies to perform benchmarking searches to justify their pricing policies of inter-company transactions. We await for further details/clarifications on potential exemptions for qualified intra-group transactions and other compliance requirements that may be introduced.
The Federal Tax Authority will be responsible for the administration, collection, and enforcement of UAE CT.
The Ministry of Finance will remain the 'competent authority' for purposes of bilateral/multilateral agreements and the international exchange of information for tax purposes.
Businesses will have ample time to prepare for the introduction of Corporate Tax, and further information on the UAE Corporate Tax regime will be provided towards the middle of 2022 to help businesses get ready and be fully compliant.
(The legislation is yet to be issued and the details for the corporate tax regime are subject to finalization).
The information in this page is meant to provide an initial introduction to the proposed UAE Corporate Tax(CT) regime in advance of relevant legislation being finalized and promulgated. It is not intended to comprehensively address all possible aspects of the UAE CT regime or to provide definitive answers, and should not be used for individual or business decisions as it does not represent the final legislation. This document is subject to change without notice.
Further information on the technical details and other specifics of the UAE CT regime will be made available in due course.
Although the press release and FAQ provided relevant information regarding some of the most relevant changes brought forward by the introduction of a UAE Corporate Tax, its technical aspects and specifics will only be known once official legislation is passed. At Excellence, our team of experts can help you in assessing the challenges and opportunities that the introduction of a Corporate Tax will bring.
Corporate Tax is a form of direct tax levied on the net income or profit of corporations and other businesses.
Corporate Tax is sometimes also referred to as "Corporate Income Tax" or "Business Profits Tax" in other jurisdictions.
The UAE CT regime will become effective for financial years starting on or after 1 June 2023Examples:
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)
UAE CT will generally apply to income earned from activities carried out under a freelance license / permit, albeit no CT will be payable unless the annual net income of the freelance professional exceeds AED 375,000.
Businesses engaged in the extraction of natural resources will remain subject to Emirate level corporate taxation and be outside the scope of UAE CT Information on other UAE CT exemptions and exclusions will be provided in due course.