Corporate Tax in UAE

Corporate Tax in UAE

UAE has imposed 9% corporate Tax (CT) from 2023 and it is essential for businesses to register for corporate Tax. If your profit exceeds AED 375,000, 9% CT will be implemented. 0% CT for the companies in UAE Free zone. Alpha Auditing provides professional corporate tax services in Dubai. With a team of approved tax agents and experienced professionals, we ensure to provide standardized corporate tax services.

Corporate Tax Rate in UAE

UAE has implemented Corporate Tax (CT) or Corporate Income Tax (CIT) based on international standards. It is applied to the business having net profit above AED 375,000 or US$ 102,000. The CT rate defined in UAE is the one of the most competitive in the world as stated by the Ministry of Finance. The corporate tax rates are as follows:

  • 0% for taxable income up to AED 375,000
  • 9% for taxable income more than AED 375,000
  • 15% tax rate for multinational and large organizations having global revenue more than AED 3.15 billion

Lear more about Documents required for Corporate Tax Registration

Corporate Tax Exemptions

There are various types of entities exempted from CT. Check out the list of entities exempted from Corporate tax in UAE.

Corporate Tax for Free Zone companies

The Ministry of Finance has clearly stated that CT incentives will be extended to Free Zone companies in the UAE. As per regulatory authorities, the company should not be engaged in any business activities on mainland UAE. Despite being in the Free zone, all the free zone companies must register for corporate tax and file corporate tax returns. Learn more about corporate tax in the free zone and mainland.

Key aspects of Corporation Tax in UAE

  • The Federal Tax Authority (FTA) will be responsible for all the matters related to CT, such as collection, administration and enforcement of CT.
  • Applicable for all UAE businesses and commercial activities include sole establishments and freelancers (subject to regulations). 
  • Taxable income will be the accountable next profit of business determined in accordance with International Accounting Standard (IAS). 
  • Tax grouping will be possible
  • Offset of losses from taxable income in subsequent financial periods will be permitted
  • Foreign corporate tax paid on UAE taxable income will be considered as tax credit against UAE corporate tax liability

What is the impact of Corporate Tax in UAE?

As stated earlier, all businesses need to register for corporate tax. To consider the implementation of CT one must prepare accordingly.

  1. All the businesses should access their existing tax structure such as people, processes and system, and align with the guidelines provided by FTA. 
  2. Perform a complete analysis of the current business model in context of corporate tax to understand the impact of CT on business.
  3. Figure out the potential opportunities to implement tax efficiently in terms of cost and administrative perspective.

In addition to that businesses must analyze the current accounting policies. And ensure that their systems and procedures are in compliance with corporate tax in UAE. Also the obligations toward Value Added Tax (VAT) have been met.

Learn about Corporate Tax fines and penalties set by FTA.

Alpha auditing Dubai is the leading audit and accounting firm and provides comprehensive corporate tax services in Dubai. Corporate tax registration is now active, and if you are looking for a trusted accounting firm to help you with corporate tax compliance, contact us.