UAE Corporate Tax Rate, Complete Guide & Professional Services
Federal Decree-Law No. 47 of 2022 established the UAE corporate tax rate and was effective June 1, 2023. The new tax regime also includes businesses on the mainland, free zones, and some foreign organizations that obtain income in the UAE. It is governed and controlled under the Federal Tax Authority (FTA), and is expected to meet the international standards in taxation as well as sustain a competitive business environment in the UAE.
The Existing Corporate Tax Rates UAE
UAE corporate tax rate will be at a competitive and business-friendly rate:
- 0% Corporate Tax Rate – 100% exemption on taxable income of up to AED 375,000, taking into consideration small businesses and startups.
- Corporate Tax Rate of 9% – This tax rate is charged on the taxable income above 375,000 AED, hence it is among the lowest charging in the world.
- Variation of Rates on Multinationals – Multinational companies that are deemed to be large (exceeding OECD Pillar Two thresholds on global revenue) (EUR 750 million and above) could be charged a different appropriate rate of 15 percent, as it is expected.
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UAE Corporate Tax Rate, Complete Guide & Professional Services
Federal Decree-Law No. 47 of 2022 established the UAE corporate tax rate and was effective June 1, 2023. The new tax regime also includes businesses on the mainland, free zones, and some foreign organizations that obtain income in the UAE. It is governed and controlled under the Federal Tax Authority (FTA), and is expected to meet the international standards in taxation as well as sustain a competitive business environment in the UAE.
The Existing Corporate Tax Rates UAE
UAE corporate tax rate will be at a competitive and business-friendly rate:
- 0% Corporate Tax Rate – 100% exemption on taxable income of up to AED 375,000, taking into consideration small businesses and startups.
- Corporate Tax Rate of 9% – This tax rate is charged on the taxable income above 375,000 AED, hence it is among the lowest charging in the world.
Who Should Pay Corporate Tax in the UAE?
Corporate tax: Corporate tax:
- Mainland Companies – All the entities licensed to conduct their operations on the mainland of the UAE.
- Free Zone Entities – Have to register and abide by them even though they might qualify to pay 0% tax on relevant income.
- Foreign Companies – If permanently established within the country of generating UAE-sourced income.
- Natural Persons – They are individuals who conduct business in the UAE and receive more than AED 1 million a year.
There are exemptions to corporate tax, which, hence, government entities are exempt, qualifying public benefit organizations, investment funds, and fully-owned subsidiaries of exempt entities (provided conditions are met).
The Calculation of the Corporate Tax Rate – How It is Calculated
In the UAE, corporate tax is applied on net profit, which is calculated as per the financial statements prepared in line with internationally accepted business accounting.
These are the main points:
- Taxable income may be lowered by deductible expenses and allowances.
- Zero percent rate on qualified income may be advantageous to free zone businesses.
- Free zone companies are taxed at 9% on the non-qualifying incomes.
- Companies have to maintain proper financial records that will be reviewed by the FTA.
Albab Tax – Corporate Tax Services
Albab Tax offers expert services in the context of businesses in the UAE, meeting the requirements of the companies’ corporate tax rate, and maximising their tax position:
- Corporate Tax Registration – Have full registration with FTA to acquire your Tax Registration Number (TRN).
- Tax: Income Calculation and Adherence – Determination of taxable income into the right rate.
- Free Zone Advisory – Free advice on qualifying income in order to enjoy the lowest 0% rate to the greatest extent.
- Tax Return Filing – Preparation and submission of cor plans with prompt tax returns.
- Continued Compliance Support – Maintaining the documents and following up with the FTA concerning you.
Why Albab Tax?
- Clear knowledge of the UAE corporate tax laws.
- Customised solutions to the mainland, free zones, and international firms.
- Compliance Focus to evade penalties and legal dangers.
- Strategic Tax Planning to make sure that one makesthe most of the 0 and 9 percent rates.
