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Corporate Tax Landscape in the UAE: A Comprehensive Overview

Discover the ins and outs of the Corporate Tax landscape in the UAE with our comprehensive overview. Gain valuable insights into rates, regulations, and strategic implications for businesses in this dynamic jurisdiction.

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On December 9, 2022, the UAE enacted Federal Decree-Law No. (47) of 2022, commonly referred to as the "Corporate Tax Law," setting the stage for the introduction of a Federal Corporate Tax (Corporate Tax) effective for financial years beginning on or after June 1, 2023.

This legislative stride is strategically aligned with the UAE's developmental trajectory, aimed at fostering a competitive business environment while adhering to international norms. By instituting a transparent and globally recognized Corporate Tax regime, bolstered by an extensive network of double tax treaties, the UAE reaffirms its status as a premier jurisdiction for commerce and investment.

Key highlights of the Corporate Tax implementation include:

Corporate Tax Rates:

A 0% rate applies to the portion of Taxable Income not exceeding a specified threshold, subject to Cabinet decisions at the Minister's recommendation.

For Taxable Income surpassing the specified threshold, a rate of 9% is levied, as determined by Cabinet decisions at the Minister's suggestion.

Special Provisions for Qualifying Free Zone Persons:

  • Qualifying Income is subject to a 0% rate, subject to certain conditions.
  • Taxable Income not meeting the criteria for Qualifying Income is taxed at 9%, as specified by Cabinet decisions at the Minister's recommendation.

Conclusion:

The UAE's Corporate Tax Law marks a significant milestone in its economic landscape, signaling a commitment to growth and competitiveness. By embracing internationally recognized standards and principles, the UAE aims to attract and retain domestic and international businesses, further cementing its reputation as a preferred destination for investment.

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