New UAE Tax Announcement

New tax announcement has been made on Friday, December 9.

A federal decree-law has been issued, introducing a nine percent rate for taxable business profits exceeding Dhs375,000.

It comes in Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses (the “Corporate Tax Law”).

Businesses will be subjected to it from the starting of their first financial year that begins on or after June 1, 2023.

Profits up to and including the Dhs375,000 threshold will be taxed at a zero percent rate to support small businesses and start-ups.

Already existing business will benefit from a zero percent corporate tax rate on qualifying income.

Interest, salaries, and other personal income from employment are not applicable for corporate taxation.

Corporate tax will also not apply to saving programmes and real estate investment.

Other exemptions include government entities, investment funds, personal funds, and public benefit organisations.

The reason is their significance and contribution to the country’s economy.

The Ministry of Finance stated, “the new corporate tax is an important milestone in building an integrated tax regime.”

The purpose is to support the strategic objectives of the country as well as boosting the competitiveness globally.

The plan is for it to provide the flexibility to deal with and support international financial systems.