In the United Arab Emirates, a corporate tax (CT) is levied on the profit margins of corporations, serving as a key revenue source for the government. This tax is calculated on a company’s taxable income, which encompasses not only the revenue from sales but also various expenses such as administration, research and development, marketing, depreciation, and the cost of goods sold.
Corporate Tax is a direct tax that businesses must pay based on their net income. The UAE Ministry of Finance has already introduced corporate tax on business profits, formalized by Federal Decree-Law No. 47 of 2022. For financial years beginning on or after June 1, 2023, businesses across the UAE will be subject to this taxation.
The corporate tax rate differs globally and is advantageous for companies, often providing more financial flexibility than personal income taxes. The UAE’s corporate tax applies uniformly across all Emirates. By implementing this tax, the UAE aims to further solidify its status as a global investment and business hub, while also fast-tracking its transformation to meet long-term strategic goals. Additionally, the UAE emphasizes transparency in tax policies and seeks to eliminate any harmful tax practices.
The UAE Ministry has outlined a structured corporate tax rate for businesses based on their taxable income:
0% corporate tax for taxable income up to AED 375,000.
0% corporate tax for taxable income up to AED 375,000.
For instance, if a company generates AED 400,000 in taxable profit for a given financial year, the corporate tax will amount to AED 2,250 (calculated as AED 400,000 – AED 375,000 = AED 25,000 at 9%).
The introduction of corporate tax places the UAE in a unique position globally, maintaining its attractiveness as a business-friendly environment. When compared with other nations, the UAE’s tax rate remains significantly lower, positioning it as a favorable destination for businesses.
This comparatively lower rate makes the UAE an appealing option for international investors, particularly when viewed against both global and Gulf Cooperation Council (GCC) benchmarks.
The Federal Tax Authority (FTA) will oversee the collection, administration, and enforcement of corporate tax across the UAE, including Dubai and all other Emirates. The corporate tax rate is uniform across the country. Businesses must submit their tax returns within **9 months** of the conclusion of their respective tax periods, with payment also required within the same timeframe.
If you haven’t yet assessed the impact of corporate tax on your business in Dubai, Bronzeagle offers expert consultation services to ensure you’re fully prepared for the upcoming regulations.
Our offerings include:
Detailed tax reports and recommendations that align with every FTA regulation.
Expert guidance on best practices tailored to your business's eligibility and specific tax circumstances.
In-depth tax reports showcasing how corporate tax rates will influence your business operations and financial transactions.
Comprehensive and accurate corporate tax reports, ensuring compliance and helping you avoid penalties.
Connect with EBS today to navigate the complexities of UAE’s corporate tax and achieve a seamless transition.
Yes, the Federal Tax Authority has implemented corporate tax in the UAE. As per Federal Decree-Law No. 47 of 2022, corporate tax will be enforced for financial years beginning on or after June 1, 2023.
Corporate tax is calculated on net profits exceeding AED 375,000. For businesses with profits above this threshold, a 9% tax rate applies. For example, if a company earns AED 400,000 in taxable profit, the corporate tax will be AED 2,250, calculated as follows: AED 400,000 – AED 375,000 = AED 25,000, which is taxed at 9%.
The tax calculation follows the same principle: companies with net profits above AED 375,000 are subject to a 9% corporate tax. For instance, if a business earns AED 400,000 in profit, the tax liability will be AED 2,250, based on the amount exceeding AED 375,000.
The corporate tax in Dubai mirrors the national framework. Businesses with annual taxable profits exceeding AED 375,000 are taxed at a rate of 9%. Companies earning below this threshold are not subject to corporate tax.
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