Introducing corporate tax in the UAE will undoubtedly have an impact on business operations, structures, and future mergers and acquisitions activities in the UAE.
It is advisable for all kinds of businesses to assess their existing structures and operations in an effort to apply the most efficient business structures and models in light of the Corporate Tax Law provisions once issued and in effect.
The following persons will be exempt from UAE Corporate Tax, either automatically or by way of application:
- The investment in real estate by individuals in their personal capacity provided the individual is not required to obtain a commercial license or permit to carry out such activity in the UAE
- An individual’s salary or income earned through employment (whether received from public or private sector). However, an individual will be subject to corporate tax if his or her income is earned from activities undertaken under a freelance license or permit.
- Interest and other income earned by an individual from bank deposits or saving schemes
- Foreign investor’s income from dividends, capital gains, interest, royalties and other investment returns
- The Federal and Emirate Governments and their departments, authorities and other public institutions
- Wholly Government-owned UAE companies that carry out a sovereign or mandated activity, and that are listed in a Cabinet Decision
- Businesses engaged in the extraction and exploitation of UAE natural resources that are subject to Emirate-level taxation
- Charities and other public benefit organisations that are listed in a Cabinet Decision
- Public and regulated private social security and retirement pension funds;
- Regulated investment funds and Real Estate Investment Trusts can apply to the Federal Tax Authority (FTA) to be exempt from UAE Corporate Tax subject to meeting certain requirements.
Note: The information in this article is meant to provide an initial introduction to the proposed UAE Corporate Tax regime and not be used for individual or business decisions as it does not represent the final legislation by the Government. More information o the UAE Corporate Tax regime will be made available in due course.
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