One of the most common requests we receive relates to incorporating a Company in the UAE and matters relating to corporate and personal taxation in the Emirates.
Following the introduction of VAT legislation, UAE announced the introduction of corporate tax for Companies operating in the country.
We thus asked our colleagues to provide an overview of corporate taxation in the UAE for those considering establishing a company there.
Corporate Tax in the United Arab Emirates?
UAE corporate tax will be applicable to all businesses operating in the UAE, excluding certain businesses specifically identified as exempt like extraction of natural resources etc, which will remain subject to emirate-level tax.
It is important to note that foreign entities and individuals will be subject to corporate tax only if they engage in trade or business activities in the UAE.
The implementation of corporate tax serves to solidify the UAE’s position as a prominent global business and investment hub and ensure compliance with international tax transparency standards.
Free Zone Entities
Free zone entities that satisfy the requisite criteria will continue to enjoy the current corporate tax incentives offered in the UAE. Free Zone entities are considered Taxable Persons for the purposes of the UAE Corporate Tax Law and are required to meet other compliance obligations. However, provided they meet certain criteria, they are eligible for a 0% Corporate Tax rate.
Free zone entities that form part of a large multinational group may be subject to the 15% Global Minimum Tax (GMT) under Pillar Two.
Personal Income Tax in the UAE
It is also important to note that individuals conducting a business or trade in the UAE (as sole-traders) may also be subject to Corporate tax on the proceeds of such business activity. This will not affect the current regime in place of no personal income tax for income derived from other sources.
Corporate tax will become effective for financial years commencing on or after June 1, 2023.
The corporate tax returns will have to be filed within 9 months from the end of the taxable period.
All categories of profits and other income reported in financial statements, prepared in accordance with internationally accepted accounting standards, will be subject to corporate tax at uniform rates.
| Taxable Income/ Category | Corporate Tax Rate (%) |
| Taxable income up to AED 375,000 (roughly EUR95.000) | 0% |
| Taxable income over and above AED 375,000 (roughly EUR95.000) | 9% |
| Large multinationals (Consolidated global revenue exceeding EURO 750 million – AED 3.15 billion) that meet specific criteria set | Different tax rate |
Large multinationals with consolidated global revenue exceeding EURO 750 million (AED 3.15 billion), meeting specific criteria, will be subject to a different tax rate, not yet specified.
The tax liability is based on the adjusted accounting net profit of the business.
Should you wish to find our more contact our team.
