When will the new UAE Corporate Tax be implemented?

When will the new UAE Corporate Tax be implemented?

From 1 June 2023, the UAE plans to introduce a federal corporate income tax for businesses to meet international standards in transparency. This will address the digitalisation of the global economy. Corporations and other entities will be required to pay this tax on their profits.

What is Corporate Tax?

Corporate Tax is a form of direct tax levied on the net income or profit of corporations and other businesses.

Corporate Tax is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions.

Who will be subject to Corporate Tax?

All businesses in the UAE will be subject to the upcoming corporate tax, with the exception of those extracting natural resources, which will remain taxable at the Emirate level. Corporate tax will only apply to foreign entities and individuals who regularly conduct business in the UAE. All activities undertaken by a legal entity will be deemed "business activities" and therefore subject to corporate tax, according to the Federal Tax Authority.

Why is the UAE introducing Corporate Tax?

A competitive Corporate Tax regime based on international best practices will cement the UAE’s position as a leading global hub for business and investment. This will accelerate the UAE’s development and transformation to achieve its strategic objectives.

Introducing a Corporate Tax regime reaffirms the UAE’s commitment to meeting international standards for tax transparency and preventing harmful tax practices.

If you have any questions about the new Corporate Tax, please get in touch with Zyla Accountants. We'll be delighted to support you every step of the way with your accounting and bookkeeping requirements in Dubai.