On 31 January 2022, the Ministry of Finance(MoF) of the UAE announced the introduction of a Federal Corporate Tax (CT) regime on business profits effective for Financial Years starting on or after 1 June 2023.
With a standard statutory tax rate of 9% and a 0% tax rate for taxable profits up to AED 375,000 to support small businesses and startups, the UAE Corporate Tax regime will be amongst the most competitive in the world.
On 26 July 2021, the Ministry of Finance issued an official statement confirming the UAE’s support of the global minimum effective tax rate as proposed under “Pillar Two” of the OECD Base Erosion and Profit Shifting project. It is supported by applying a different CT rate to large multinationals.
Applicability of Corporate Tax in Free Zones :
• Corporate Tax 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 in mainland UAE.
• However, Businesses registered in a Free Zone will be required to register and file a Corporate Tax Return.
• Tax withholding regime currently not to be included in proposed Corporate Tax law.
• UAE businesses will need to comply with transfer pricing rules and documentation requirements in line with OECD Transfer Pricing Guidelines.
• The Federal Tax Authority will be responsible for the administration, collection and enforcement of UAE CIT.
Corporate Tax is not applicable for Following cases :
• Income from dividends, capital gains, and other investment returns received by foreign investors.
• Employment income, real estate income, savings income, investment returns, and other income generated by individuals of own personal capacity.
FOR MORE INFORMATION, CONTACT US :
Phone : +971 52 1952 532 / +971 4 240 1110
Mail-Id : info@yugaaccounting.com
Website : www.yugaaccounting.com