The United Arab Emirates (UAE) is making headlines with the introduction of a corporate tax system. This marks a significant shift for the country, traditionally known for its tax-friendly environment. However, the newly introduced rates remain highly competitive on a global scale, ensuring the UAE’s continued attractiveness as a premier business hub.

What’s New? A 9% Corporate Tax

The key takeaway? The UAE has implemented a 9% corporate tax on business profits exceeding AED 375,000. This tax applies to financial years starting on or after June 1, 2023.

Who Needs to Register?

The tax applies to two main categories of businesses:

• Residents: This includes entities incorporated in the UAE (mainland, free zones, or offshore), foreign entities effectively managed here, and individuals conducting business in the UAE. Residents are taxed on their worldwide income.
• Non-Residents: Companies with a permanent establishment in the UAE or deriving UAE-sourced income fall under this category. They are taxed only on the income associated with their UAE presence.

Registration Deadlines and Exemptions

Don’t miss out! Registration deadlines are based on the month your trade license was issued. Failing to register by the designated deadline can result in a penalty of AED 10,000.

The good news? Several entities are exempt from the new tax:

• Government entities and government-controlled entities.
• Specific qualifying businesses, including:
  • Extractive and non-extractive natural resource businesses.
  • Public benefit entities.
  • Qualifying investment funds.
  • Pension or social security funds.
  • Wholly-owned UAE subsidiaries of exempt entities.
• Small Businesses: Businesses with revenues below AED 3 million for the past and current tax periods can avail of small business relief until December 31, 2026. This exempts them from corporate tax and reduces compliance requirements.
• Qualifying Free Zone Persons (QFZPs): QFZPs may benefit from a 0% corporate tax rate on their qualifying income, subject to meeting specific criteria.

All taxable persons should register for a corporate tax registration number. The UAE government provides comprehensive resources and clear guidelines to facilitate this process.

New regulations can be complex. Reliable Experts, with our team of tax specialists, can be your trusted partner throughout this transition. We’ll guide you through the entire process, ensuring your business remains compliant and maximizes potential benefits under the new tax regime.