Corporate tax to bolster UAE economy manifold

Corporate tax to bolster UAE economy manifold

Nimish Goel, country partner at WTS Dhruva Consultants.

The domestic corporate tax regime will be effective for financial years starting on or after June 1, 2023.

Published: Sat 23 Apr 2022, 8:07 PM Last updated: Sat 23 Apr 2022, 8:09 PM

The newly introduced corporate tax will strengthen the UAE’s economy manifold as the country would attract well-meaning businesses and corporate behemoths, said Nimish Goel, country partner at WTS Dhruva Consultants.

On January 31, 2022, the UAE announced plans to introduce corporate tax at a headline rate of 9 per cent for taxable net income greater than Dh375,000. In addition, a different rate will be proposed for very large companies that are covered under the provisions of OECD Pillar2. This rate of tax could be 15 per cent.

The domestic corporate tax regime will be effective for financial years starting on or after June 1, 2023. The proposed tax rate is competitive and is comparable to global low tax hubs.

With the introduction of VAT in 2018, Country-by-Country Reporting, and ESR in 2019, the introduction of corporate tax was written on the wall.

Goel said, “In my opinion, the introduction of corporate tax was imminent after OECD’s Pillar1 and Pillar2 announcements to which UAE is a signatory.