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Corporate Tax In UAE-A Detailed Guide-2024

What is Corporate Tax in UAE (CT)?

Corporate Tax in UAE is a form of direct tax levied on the net income or profit of corporations and other businesses. CT is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions.

Who will be subject to UAE Corporate Tax?

Juridical persons incorporated in the UAE and juridical persons effectively managed and controlled in the UAE, as well as to foreign juridical persons that have a permanent establishment in the UAE.

Will individuals be subject to UAE Corporate Tax?

Only individuals who engage in a business or business activity as per a Cabinet Decision that will be issued in due course will be subject to UAE CT. Individuals engaged in other activities will generally be outside the scope of the CT regime.

Will an individual’s employment income be subject to UAE Corporate Tax?

UAE CT will not apply to an individual’s salary and other employment income.

Who is exempt from Corporate Tax in UAE?

The following persons are exempt from UAE CT

  • The UAE Federal and Emirate Governments and their departments.
  • Government-owned companies that operates a must-do activity
  • Companies engaged in the extraction of UAE natural resources  that are under Emirate-level taxation.
  • Public Benefit Entities that are listed in a Cabinet Decision.
  • Investment Funds that meet the prescribed conditions
  • Pensions or social security funds.

How do you determine taxable income for UAE CT?

The taxable income for a Tax Period will be the accounting net profit (or loss) of the business. The accounting net profit (or loss) of a business is the amount reported in its financial statements prepared in accordance with Corporate accounting laws.

What is a Corporate Tax Period?

CT is filed annually, it should be  specify the “Tax Period”. The Tax Period will normally  from 1 January to 31 December. unless the business applies a different 12-month period for preparing its financial statements

What is the UAE Corporate Tax Rates?

TaxpayerApplicable UAE Corporate Tax rate
Individuals and juridical persons

0% for taxable income up to and including AED 375,000.

9% for taxable income exceeding AED 375,000

Qualifying Free Zone Persons

0% on qualifying income

9% on taxable income that does not meet the qualifying income definition

What is the timing of filing corporate tax return?

Corporate Tax return is to be filed annually.

  • Entities whose financial year-end is 31 May should file their CT return for the financial year-ending 31 May 2024
  • Entities whose financial year-end is 30 September should file their CT return for the financial year-ending 30 September 2024
  • Entities whose financial year-end is 31 December should file their CT return for the financial year-ending 31 December 2024

Is investment in real estate subject to corporate tax?

If the investment in real estate is within an individual’s self-capability, then it is free from tax. Besides these, transactions within the same company and reorganizations are not subject to corporate tax if the required conditions are met.

Will small Scale businesses be given any CT relief?

0% CT rate for taxable income up to and including AED 375,000, small businesses with revenue below a threshold of AED 3,000,000(three million dirhams) for the relevant tax period and previous tax periods can claim ‘small business relief’. The threshold shall apply to tax periods commencing on or after 1 June 2023 and ending before or on 31 December 2026. Small Business Relief is not applicable to QFZPs and multinational enterprises group as defined in law.

Any specific tax rules for foreign companies operating in the UAE?

Foreign Companies “effectively managed and controlled” in the UAE will be treated as a resident entity for UAE CT purposes.

Need Help On Corporate Tax In UAE?

3A Global Corporate Services Provider can assist your company to develop effective tax strategies to minimize tax liabilities. We can conduct tax planning, provide advice on tax incentives and exemptions, and assist with tax compliance to ensure your company meets all regulatory requirements.

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