UAE introduces corporate tax from June 1, 2023

The United Arab Emirates (UAE) is set to raise its corporate tax from 0% to 9%

The UAE has announced today that it will, for the first time, levy tax on all taxable corporate profits at a rate of 9% from June 1, 2023. The standard statutory tax rate is set at 9%, while taxable profits up to 375,000 dirhams ($102,107.50) are taxed at 0%, in order to support SMEs and start-ups.

The UAE has long leveraged its low-tax / tax-free status to attract investment and business and establish itself as a commercial hub. According to the Finance Ministry, the introduction of the corporate tax will align the UAE with global efforts to combat tax avoidance, and help it address challenges resulting from the digitalisation of the global economy.

The Finance Ministry also added that the introduction of the corporate tax would also set in motion the introduction of the global minimum tax – as agreed by the OECD and 136 countries in October, at a rate of 15% – on large multinationals that meet certain criteria.

The 9% tax rate will apply to all corporations and commercial activities, except the “extraction of natural resources” which is taxed at the Emirate level.

The Finance Ministry said that businesses in the UAE are still exempt from paying taxes on dividends received from shareholdings and capital gains.

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