UAE Corporate Tax – A Basic Starting Guide!

The United Arab Emirates (UAE) Ministry of Finance (Ministry) has recently announced a Federal Corporate Tax on business profits for the first time in the UAE. By consulting with the business community and other interest parties as part of the implementation process, the UAE Government is demonstrating its commitment to implementing a Corporate Tax regime that is compatible with the UAE’s business environment.

tax documents on the table
Photo by Nataliya Vaitkevich on Pexels.comOpens in a new tab.

In the development of the UAE Corporate Tax regime, the Ministry of Finance has been guided by a set of internationally accepted principles to ensure efficiency, fairness, transparency and predictability in the design and execution of the proposed UAE Corporate Tax regime. However, most countries in the world already have a comprehensive Corporate Tax regime, including most of the GCC Member States.

The information set out in this alert is based on currently available guidance from the Ministry and remains subject to the Corporate Tax Law provisions once issued.


What is UAE Corporate Tax?

Corporate Tax is a form of direct tax levied on the net income or profit of corporations and other businesses. This is also called Corporate Income Tax or Business Profit Tax.

The Federal Tax Authority will be responsible for the administration, collection, and enforcement of UAE Corporate Tax and the Ministry of Finance will remain the ‘competent authority’ for purposes of bilateral/multilateral agreements and the international exchange of information for tax purposes.

The UAE Corporate Tax is a Federal tax and will therefore apply to all UAE business and commercial activities undertaken by entities or individuals across the seven emiratesOpens in a new tab.. Introducing the Corporate Tax regime reaffirms the UAE’s commitment to meeting international standards for tax transparency and preventing harmful tax practices. This will cement the UAE’s position as a leading global hub for business and investment, and accelerate the UAE’s development and transformation to achieve its strategic objectives.

Paying corporate taxes can be more beneficial for business owners than paying additional individual income tax. The money collected from corporate taxes is used as the source of revenue for a country.


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 on the UAE Corporate Tax regime will be made available in due course.


Deena

Human Resource professional and writer.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Recent Posts