
CORPORATE TAX
IN DUBAI,
ABU DHABI &
THE UAE
Our Corporate Tax (CT) service in Dubai, Abu Dhabi and the UAE is part of our tax consultancy services in Dubai, Abu Dhabi and the UAE.
Corporate Tax is interchangeably referred to as Income Tax across the GCC countries. It is a form of direct tax collected by governments as a source of income; it is levied on the net income or profits of corporations and businesses.
The UAE government announced on 31 January 2022 their plan to introduce a federal Corporate Tax on business profits. With effect from 1 June 2023, Corporate Tax at a standard tax rate of 9% was applied to all mainland business and commercial activities on taxable profits above AED 375,000.
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 ‘Corporate Tax Law’) which forms the basis for the implementation of the new Corporate Tax regime. The Corporate Tax Law was published in the Official Gazette on 10 October 2022 and became effective on 25 October 2022 and will apply to Taxable Persons for financial years commencing on or after 1 June 2023. It is expected that the Corporate Tax Law will be supplemented with Cabinet Decisions and Executive Regulations, which will contain more detailed regulations pertaining to the Corporate Tax regime.

TIMING
Corporate Tax is effective for financial years starting on or after 1 June 2023. Businesses with an accounting reference date of 31 December will become subject to Corporate Tax from 1 January 2024.

FOREIGN TAX CREDITS
Any foreign Corporate Tax and Withholding Taxes (WHT) imposed on the UAE taxable income is allowed as a tax credit against the Corporate Tax liability.

TAX BASE
CT will be payable on the profits of the UAE businesses as reported in their financial statements prepared in accordance with accounting standards accepted in the UAE, with minimal exceptions and adjustments.

RATE
The Corporate Tax rates are 0% for taxable income up to AED 375,000; 9% for taxable income above AED375,000.

FREE ZONES
Businesses established in free zones are subject to Corporate Tax, but the Corporate Tax regime still continues to honour the Corporate Tax incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE. Free zone businesses are required to register and file a Corporate Tax return. A Free Zone entity need audited financial statements if it wants to benefit from the 0% Corporate Tax regime.

ADMINISTRATION
The Federal Tax Authority (“FTA”) shall be responsible for the administration, collection, and enforcement of Corporate Tax. Businesses are required to register for Corporate Tax purposes and are required to electronically file one Corporate Tax return per financial period. No provisional or advance Corporate Tax filings is required, nor any advance Corporate Tax payments. A UAE group of companies may elect to form a tax group and be treated as a single taxable person (fiscal unity) if the parent company holds at least 95% of the share capital and voting rights of its subsidiaries. A UAE tax group is only required to file a single tax return for the entire group.
WHAT ARE THE RISKS RELATED TO CORPORATE TAX SERVICES IN THE UAE?
Through careful planning and professional advice, the minimal risks connected to Taxes in the UAE can be reduced. You can handle the Tax legislations and procedures easily with the assistance of professional consultants, ensuring adherence to legislations and reducing potential risks.
For an expert consultation, contact Creation Business Consultants via email [email protected] or call +971 4 878 6240 today.
The Corporate Tax legislation (Federal Decree-Law No. 47 of 2022) by the UAE Ministry of Finance was released on 9 December 2022. Please see the link below for an overview of the Corporate Tax Law:
For more information, you can watch Creation Business Consultants’ UAE Corporate Tax webinar: