How to Implementation of Corporate Tax in the UAE: Overview, Regulations, and Implications

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Introduction about Corporate tax:

According to the UAE Federal Decree-Law No. 47 of 2022 on taxation of corporations and businesses (the “Corporate Tax Law”), businesses will become subject to UAE Corporate Tax from the beginning of their first financial year that starts on or after 1 June 2023.

What is Corporate tax (CT)? Corporate tax is a form of direct tax levied on the net income or profit of corporations and other entities from their business.

Objectives of CT:

By introducing the CT, the UAE aims to:

• cement its position as a leading global hub for business and investment
• accelerate its development and transformation to achieve its strategic objectives
• reaffirm its commitment to meeting international standards for tax transparency and preventing harmful tax practices.

CT Rate: As per Ministry of Finance, CT rates are:

• 0 percent for taxable income up to AED 375,000
• 9 percent for taxable income above AED 375,000 and
• a different tax rate (not yet specified) for large multinationals that meet specific criteria set with reference to 'Pillar two' of the OECD Base Erosion and Profit Shifting Project.