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Corporate Tax in UAE Starting from June 2023
UAE authorities are working on introducing corporate taxes starting from 1st June 2023, and this awareness has resulted in rumbles among tax professionals and businesses. The Ministry of Finance assures that the taxation will follow the rules of the World Trade Organization. In this case, the tax regime will be highly competitive globally and aligned with international standards. Businesses are encouraged to seek guidance from experts to ensure smooth tax compliance.
What is a Corporate Tax in the UAE 2023?
Corporate tax is also referred to as “Business Profits Tax” or “Corporate Income Tax.” It directly taxes corporations and other business entities’ profits and net income. Simply put, it is a tax on net profits realized by business corporations. The requirements are for entities to submit a particular percentage tax rate from their net profits, which makes it essential to have professional accounting and bookkeeping in place.
Who Is Required To Pay Corporate Tax in the UAE 2023 ? Â
Businesses with a net profit exceeding 375,000 AED are subject to corporate tax, and these entities must pay a specific percentage of their net profit as the required corporate tax.
The standard corporate tax payable is 9 percent of the companies’ taxable profit. There is also the accreditation of paid foreign taxes against the corporate payable taxes in the UAE. For this reason, it is impossible to have double taxation.
There will be a zero-statutory tax rate in case the amount of the net profits to 375,000 AED or below. This undertaking aims to support medium, small size, and startup enterprises.
Who is Exempted from Corporate Tax in the UAE 2023?
There are corporate tax exemptions for particular forms of income and companies. Listed below are incomes and businesses exempted from corporate tax:
Corporate tax will not be charged to individuals. Those with investment returns, real estate income, and employment income—essentially personal earnings not tied to commercial business activity in the UAE—are not subject to corporate tax.
Cross-border and domestic payments will not be taxed. Foreign investors with no business presence or operations in the UAE are also exempt.
Entities operating in UAE free zones that comply with regulatory requirements will continue to enjoy existing tax incentives.
Organizations involved in the extraction of natural resources like gas and oil will remain exempt, as they are already taxed at the emirate level.
Dividends and capital gains earned from qualifying shareholdings are not subject to taxation.
UAE corporate groups may apply for group relief or be taxed as a single entity, benefiting from generous loss utilization and restructuring rules.
The introduction of a corporate tax regime is a significant step toward strengthening the UAE’s fiscal foundation. It supports the government’s long-term development strategy by creating a sustainable revenue stream to be reinvested into the national economy—helping businesses grow in a more structured environment.
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How Can Choose UAE Help
Starting a business in the UAE has always been favorable to foreign entrepreneurs wanting to take advantage of the UAE’s fantastic tax regimes. Despite the introduction of corporate taxes, the UAE remains one of the top countries worldwide with the lowest taxes imposed on individuals and enterprises. With support services like company formationand corporate structuring, the process of setting up remains smooth and efficient.
Whether you’re an SME, startup, or foreign investor looking to expand in the UAE, our Company Formation Specialists can guide you through the corporate tax changes and what they would mean for your business. They provide tailored solutions backed by valuable, unbiased, and constantly updated industry knowledge. We also support new entrepreneurs with residence visas, banking and finance setup, office solutions, and creative branding to help you launch with confidence.
Start your own business in the UAE today—contact us.
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