UAE issues corporate tax law, reveals exemptions

UAE issues corporate tax law, reveals exemptions

Tax shall be imposed on profits accrued and not on the total turnover

Published: Fri 9 Dec 2022, 7:33 PM Last updated: Fri 9 Dec 2022, 7:38 PM

The UAE on Friday issued a corporate tax law, under which a nine per cent tax rate will be applicable on companies posting a profit of above Dh375,000.

The tax will be applicable to businesses in UAE from the financial year commencing on or after June 1, 2023.

The threshold of Dh375,000 has been included in order to support small and medium enterprises, and startups and make the economy more competitive.

It’s pertinent to note that the corporate tax shall be imposed on profits accrued and not on the total turnover of the business.

Importantly, the corporate tax will not be applied to individuals’ salaries or their income from employment. In addition, personal income earned from bank deposits or savings programmes and investments in real estate by individuals in their personal capacity are also not subject to the tax.

Corporate tax on businesses is levied in almost every country in order to diversify the revenues of the governments.

The Ministry of Finance said that the Federal Decree-Law No.47 of 2022 on the Taxation of Corporations and Businesses will help build