UAE: THE RIGHT TIME TO THINK ABOUT CORPORATE TAX LAW

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UAE: The Right Time To Think About Corporate Tax Law

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UAE has officially issued that, from the beginning of first Financial Year on or after 1 June 2023 Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses a federal decree-law on corporate tax at 9 percent rate for taxable business profits exceeding AED375,000. And will be taxed at a zero percent rate to the existing free zone entities on qualifying income; which support small businesses and start-ups.

Natural resource extraction activities are exempted from Corporate Tax and remains to local emirate-level taxation. Other exemptions are available to organizations such as government, semi-governmental, private sector, interest, personal income, pension and public benefit organizations, investment in real estate.

The Ministry will remain as ‘competent authority’ for purposes of bilateral, multilateral agreements and the international exchange of information for tax purposes. The Federal Tax Authority will be responsible for the administration, collection, and enforcement of the Corporate Tax Law.

A parent company by combining the financial accounts of each subsidiary, enterprises conducting offshore and onshore operations in the country should check for the applicable tax period to calculate the tax for not to affect their cross-border transactions. to ensure they comply with the new corporate tax regime.

That has fashioned to serve equity and principles, promotion of investments, enhancing global economic competitiveness, sufficiency to establish a new source of income that is not reliant on oil and corporate dividends and may directly or indirectly support the UAE’s global targets under the UN Sustainable Development Goals (SDGs); said by the experts.