When will the corporate tax be implemented in UAE?
One of the hottest topics of discussion among businesses and tax professionals these days is corporate tax in Dubai and UAE.
The Ministry of Finance in UAE has announced the introduction of Federal Corporate Tax from 1st June 2023. The motive of the authorities behind the introduction of corporate tax is to incorporate best tax practices globally and minimize the burden of compliance on businesses.
The introduction of corporate tax is also expected to bring a competitive advantage to the country by attracting more foreign investments in the UAE. Besides, it will be beneficial for business owners in the UAE as they will be paying corporate tax rather than paying additional individual income tax.
Given that corporate tax in Dubai is fairly new for businesses, it is essential to understand the concept.
So let us first understand what is corporate tax.
What is Corporate Tax?
Corporate tax is a type of direct tax levied on the net income or profit of corporations and other entities earned from their business. In simple words, it requires companies to pay a certain percentage of profit as corporate tax.
Who is subject to Corporate Tax?
Corporate tax will apply to:
- All businesses and individuals performing business activities under a commercial license in UAE
- Foreign businesses and individuals if they run ongoing or regular trade or business in UAE
- Free zone businesses in UAE
- Banking operations
- Businesses engaged in real estate management, construction, development, agency, and brokerage activities
What is the Rate of Corporate Tax in UAE?
The corporate tax rate will be 0% for taxable income up to AED 375,000 and 9% for taxable income above AED 375,000.
Apart from the above, a different corporate tax rate of 15% would apply to large multinationals (having a consolidated global revenue exceeding € 750 million i.e. AED 3.15 billion) that meet specific criteria set with reference to “Pillar Two” of the OECD BEPS project.
Effective Date of Implementation of Corporate tax in Dubai, UAE
As mentioned earlier, the corporate tax will be applicable for financial years starting on or after 1 June 2023. However, the effective applicable date may change depending on the financial year followed by the business.
For companies that adopt a fiscal year starting on 1 June 2023 and ending on 31 May 2024, corporate tax will be applicable from 1 June 2023 (which is the beginning of the first financial year that starts on or after 1 June 2023).
For companies that adopt a calendar year starting on 1 January 2023 and ending on 31 December 2023, corporate tax will be applicable from 1 January 2024 (which is the beginning of the first financial year that starts on or after 1 June 2023).
For ease of understanding, please refer to the table below.
Financial Year End |
First Corporate Tax Period |
| 30th June | 1 July 2023 – 30 June 2024 |
| 31st December | 1 January 2024 – 31 December 2024 |
| 31st March | 1 April 2024 – 31 March 2025 |
Next Steps for Businesses in UAE
With corporate tax being implemented soon, businesses in the UAE will need to strengthen their accounting, auditing and tax compliance. They will need to prepare themselves for the new tax regime.
How Can Aviaan Accounting Help?
Aviaan Accounting can help you get ready for the new tax regime and transform your business to the corporate tax era in a smooth and phased manner. Our corporate tax team will help you in assessing the challenges and opportunities that the introduction of a corporate tax will bring.
For more information, book a consultation call with us.
For enquiries, e-mail: info@aviaanaccounting.com
Related Articles:
How to Register for Corporate Tax in UAE Dubai? A Guide and User Manual
Top ranked 20 Best Corporate Tax Services Consultants in Dubai UAE: Comprehensive-Guide-and-Review
Top Corporate Tax Consultants in Dubai, UAE
UAE Corporate Tax Guide to Registration, Deregistration & Filing Returns
List of Corporate Tax Services Firms in Dubai, UAE
Which Entities are exempted from UAE Corporate Tax?
Top 5 Best Corporate Tax Consultants in Dubai, UAE
Public Consultation Paper Summary Corporate Tax UAE
Corporate Tax Consultant in Dubai, UAE
CORPORATE TAX IN UAE – Frequently Asked Questions (FAQs)
Top Best Corporate Tax Impact Assessment Services in Dubai, Abu Dhabi and UAE
UAE Corporate Tax Federal Decree Law (FTA) Summary
What will be the Impact of the Proposed UAE Corporate Tax on Free Zone and Mainland Firms?
What is the Corporate Tax Rate in UAE?
How To Compute Your Tax Liability Under UAE Corporate Tax
Corporate Tax in UAE – How Does It Affect You And Are You Ready?
No. 1 Best Corporate Tax Consultant in Abu Dhabi, Sharjah, Ras Al Khaimah, Ajman, Fujairah
List of Corporate Tax Services Firms in Dubai, UAE