On December 9, 2022, the United Arab Emirates (UAE) issued the federal law on taxation of corporations and businesses.
The Federal Decree-Law No. 47) of 2022 on the Taxation of Corporations and Businesses provides the legislative basis for the introduction and implementation of a federal corporate tax regime in the UAE.
Under the regime, corporate tax will be levied at a headline rate of nine percent on taxable income exceeding AED 375,000. Taxable income below this threshold will be subject to a zero percent corporate tax rate.
The new corporate tax regime is effective for financial years starting June 1, 2023.
According to the Finance Ministry, “the introduction of a corporate tax regime is intended to help the UAE achieve its strategic objectives and accelerate its development and transformation. The certainty of a competitive corporate tax regime that adheres to international standards, together with the UAE’s extensive network of double tax treaties, will cement the UAE’s position as a leading jurisdiction for business and investment.”
“Given the position of the UAE as an international business hub and global financial centre, the UAE corporate tax regime builds from best practices globally and incorporates principles that are internationally known and accepted. This ensures that the UAE’s corporate tax regime will be readily understood and is clear in its implications,” it said.
The fine print of the law is available on the Ministry’s website.