All You Need to Know About The Corporate Tax - Marque way

All You Need to Know About The Corporate Tax

February 4, 20220

Business setup in Dubai All You Need to Know About The Corporate Tax Marqueway

All You Need to Know About The Corporate Tax

On 31 January, the Ministry of Finance announced the new corporate tax that would be applicable from 1 June 2023.

The latest change would mean 9% corporate tax for taxable income exceeding AED 3,75,000. Zero tax will be applied to businesses for income below that margin. This is to support startups and small entrepreneurs.

The change comes in line with UAE’s rise as a global business hub. It aims to meet the International standard of tax transparency and accelerate UAE ‘development and economic growth. It would try to address harmful tax practices.

The tax will only apply to income of any kind coming from UAE related trade and business. Foreign investors who do not have business in the UAE won’t be taxed. It will be applied only to the adjusted net profits of any business. Free zone businesses can continue to receive tax incentives, provided they meet the requirements. Taxes won’t be applied on capital gain dividends that a UAE business would get from its shareholding. Intra-group restructuring and transactions also won’t be taxed.

The UAE does not have income taxes but collects taxes on other forms like Excise tax, value-added tax and taxes on tourists facilities.

The latest update on corporate tax makes UAE an attractive and competitive destination for businesses since it is one of the lowest in the world. The UAE government has been taking measures to diversify its income from oil and the new corporate taxes are seen as an important step in that direction. Various emirates have been levying taxes and fees for the last few years to avoid dependency on oil revenues alone. It will not only help to increase revenue but will also help the government to meet international standards in matters relating to tax transparency.

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Copyright by Marqueway