Page 23 - Premier Brains Global -Doing Business in UAE (Low Res)

DOING BUSINESS in UAE

who regularly or continuously conduct trade
Corporate Tax or commerce in the UAE thus proving to have
permanent establishment in UAE.

• Foreign businesses having place of
UAE has introduced Corporate tax from
effective management in UAE.
01 June 2023 and is applicable to taxable
persons whose financial year is starting on
There are certain entities exempt from
or after 01 June 2023.
corporate tax such as government entities,
By introducing the CT, the UAE aims to:
public benefit entities, pension funds or
corporate entities that are wholly owned
• Solidify its position as a major
and controlled by exempt entities
international center for trade and
Corporate Tax would generally be imposed
investment.
annually, with the Corporate Tax liability will
• Speed its growth and transformation
be calculated on a self-assessment basis
in order to fulfill its strategic goals, and
by the Taxable Person. The requirement to
• Reaffirm its dedication to
file and pay tax is within 9 from end of the
upholding global standards
financial year, for example if financial year
for tax transparency and avoiding
of a company is from 01 Jan 2024 to 31 Dec
unfair tax practices.
2024, it must file and pay tax by 30 Sep 2025
Certain type of income earned by taxable
Scope of CT
persons is also exempt such as local
Corporate Tax is applicable to: dividends from UAE legal persons, foreign
• All companies and individuals
dividends & capital gains (subject to
conducting business activities in the UAE
participation exemption rule), income by
under a commercial license. In case of
foreign branch who claimed for an exemption
individuals, if they are earning any income
by meeting certain conditions, income
for which obtaining a license is not a legal earned from operation / leasing of aircrafts
requirement are considered outside the
or ships in international transportation by
scope of Corporate tax.
non-residents
• The UAE CT regime will continue to honor
the CT incentives currently being provided to Corporate Tax Rates:
free zone businesses that adhere to all legal For taxable income beyond a threshold of
requirements and do not conduct business AED 375,000, the standard CT rate is 9%; for
in the UAE’s mainland (except for certain income below the threshold, it is 0%.
exceptions on transactions with mainland
as covered under qualifying activities Entities in the UAE Free Zone meeting all
conducted by the freezone) requirements may be liable for a 0% CT on
their “Qualifying Income”. Free Zone entities’
• Businesses engaged in the extraction non-qualifying income will be subject CT up
of natural resources remain subject to the to 9 percent. There are provisions which may
current Emirate level tax rules and is outside disqualify the freezone from being treated
the scope of CT. as freezone for corporate tax purposes, for
4 years, thus these entities need to carefully
• Banking operations, including those assess its tax standing.
currently taxed at the Emirate level, are also
be subject to CT

• Foreign organizations and individuals
23