The UAE government has announced the imminent introduction of a federal corporate tax. Corporate tax will be introduced in the UAE from June 2023. It will be charged at a rate of 9% of net accounting income.
GloBAS Consulting FZ-LLC participated in a seminar organized by RAKBANK (UAE) in collaboration with Deloitte Middle East and MI Capital to learn more about this important announcement, expert opinions and observations.
From June 1, 2023, federal corporate tax will be the new reality in the UAE.
The corporate tax rate of 9% will apply:
– for all business transactions and transactions with UAE mainland companies or within UAE mainland companies;
– for free zone companies that have a branch on the mainland and receive income from sources on the mainland.
The 0% corporate tax rate will still be an advantage for certain transactions and businesses in the free zone, such as:
– international transactions with companies outside the UAE,
– any transactions between companies in the same Free Zone or with companies from any other Free Zone;
– between free zone companies and their groups on the mainland (branch income);
– companies with annual income below AED 375,000;
– the sale of goods by free zone companies in certain zones to enterprises on the mainland, which are importers of goods.
Importantly, companies that have a 0% income tax refund rate will still be required to register and report a 0% income tax file. The reporting procedure and the entire new regime are expected to be as simple as possible.
For companies operating with primary land in the UAE, the rules and clarifications on the calculation of tax are currently being clarified. For the first time, this tax will need to be paid and reported within 9 months after the first tax period, that is, until September 2025. We are awaiting other important clarifications and will keep you updated.
Nevertheless, at the moment and for the foreseeable future, the UAE remains one of the most attractive countries for investment, production, development of new technologies, trade and services. The UAE will delight investors for a long time to come with low taxes, special business conditions and simple and understandable rules of the game.
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