Companies will require expert guidance to comply with new UAE corporate tax laws

Companies will require expert guidance to comply with new UAE corporate tax laws

Dubai, UAE - Introduced in January 2023 and effective as of June 2023, the new 9% corporate tax rate has been met with mixed reactions from businesses operating in the UAE. Some companies have welcomed the move as a step towards greater economic stability and sustainability, while others have expressed concern about the potential impact on their bottom line. Overall, the new corporate tax is expected to affect the UAE’s business landscape significantly and will require companies to review their operations and financial planning carefully.

As UAE-based businesses await further clarifying Cabinet regulations, a more nuanced picture of the country’s corporate tax regime is emerging - one that makes it clear that most companies will need expert guidance to ensure compliance. What is clear from Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, which provides the foundation for the UAE’s corporate tax regime, is that the country is committed to following international best practices. For example, businesses operating in several strategic sectors can take advantage of certain exemptions, and free zone entities can maintain their 0% tax position (subject to certain conditions).

However, it could prove challenging for businesses to navigate critical questions, such as whether an