What are the implications of UAE corporate tax for medium-sized companies?

What are the implications of UAE corporate tax for medium-sized companies?

The UAE has long been known for its business-friendly policies and tax-free environment. Following the introduction of VAT back in 2018 and corporate tax being rolled out effective from June 2023, UAE businesses and investors are getting used to the new reality – tax is here and it’s here to stay. This change has implications for medium-sized companies, as they navigate the evolving landscape and consider the impact on their operations.

The 9% corporate tax can considerably affect medium-sized companies’ profitability and available funds for expansion, investment, or other business activities. The UAE Ministry of Finance recently announced that businesses and individuals that generate annual revenues of up to AED 3 million will be eligible to benefit from small business tax relief, which will be available for financial years beginning on or after 1 June 2023. The aim behind small business relief is to support small businesses that provide goods and services and operate within the UAE. If the business’s revenue exceeded AED 3 million in a prior tax period, then small business relief will not be available. Therefore, it is likely that medium-sized companies will not profit from such relief.

Therefore, it is crucial for medium-sized companies to seek expert advice