Corporate Tax Landscape in the UAE: A Comprehensive Overview

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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