The United Arab Emirates (UAE) has announced the introduction of a federal Corporate Tax (CT) on business profits for financial year starting on or after 1 June 2023. In April 2022, The Ministry of Finance published a digital public consultation providing an overview of the CT Law on their website. The business community in the UAE and other interested parties generated their feedback regarding the CT implementation.
On 9 December 2022, the UAE released the Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses (hereinafter referred to as the ‘CT Law’) which forms the basis for the implementation of the new CT regime.
It is expected that the CT law will be supplemented with Executive Regulations, which will contain more detailed regulations pertaining to the CT regime.
Whilst the UAE had already introduced Value Added Tax (VAT) in 2018, the implementation of a Federal Corporate Tax in Dubai & the UAE marks another important milestone in the country’s gradual evolution towards a mature tax jurisdiction. Although the UAE does not currently have personal income tax, it should be noted that individuals may be subject to the new CT to the extent that they would generate business income in the UAE.