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UAE Federal Corporate Tax: A Comprehensive Guide

Effective from 1 June 2023, the UAE Ministry of Finance has introduced the UAE Federal Corporate Tax (CT), bringing forth significant changes in the tax landscape for businesses operating in the Emirates. As part of the UAE’s commitment to combat tax avoidance and evasion on a global scale, this new tax regime aims to enhance transparency and promote fair taxation. The Federal Tax Authority will be responsible for administering and ensuring compliance with the CT regulations.

Aligned with internationally accepted accounting standards, CT will be levied on taxable company profits reported in financial statements. This development follows the successful implementation of the Value Added Tax (VAT) regime in 2018, further establishing the UAE’s dedication to a robust and equitable tax system.

 

Key Highlights of the UAE Federal Corporate Tax:

Statutory Tax Rates:

Net profits exceeding AED 375,000 will be subject to a standard statutory tax rate of 9 percent.

For businesses with net profits of AED 375,000 or less, a 0 percent tax rate is applicable. This provision aims to alleviate administrative burdens for small businesses and startups, fostering growth and entrepreneurial spirit.

 

Exemptions:

Personal income from employment, real estate, investments, and other non-UAE trade or business-related income earned by individuals will be exempt from CT.

Dividends, capital gains, and investment returns earned by foreign investors will also be exempt from UAE CT.

 

Free Zone Benefits:

Companies operating in Free Zones will continue to enjoy a tax-free environment, provided they solely conduct business within the Free Zone and comply with regulatory requirements.

Free Zone businesses, however, are required to register and file a CT return, ensuring compliance with tax regulations.

 

Implementation Timeline:

Most businesses following the calendar financial year (1 January – 31 December) will be subject to UAE CT starting from 1 January 2024.

 

How IRIS GROUP Can Support Your Business:

At IRIS GROUP, we understand the complexities and implications of the UAE Federal Corporate Tax. Our dedicated team is here to assist you in navigating the changes and providing expert guidance tailored to your business needs. As the legal framework and regulations evolve, we offer comprehensive advice and analysis to help you assess the impact of CT on your operations.

Our team comprises experienced tax and accounting specialists who can aid in the implementation of your company’s CT filings, including the preparation and submission of applications. Additionally, we provide ongoing support and advisory services to ensure your compliance with tax and accounting obligations.

 

Stay Informed and Stay Ahead:

As the UAE’s tax landscape continues to evolve, it is crucial to stay updated with the latest developments. At IRIS GROUP, we are committed to keeping you informed about the ever-changing tax regulations and their implications for your business. We encourage you to reach out to our team for personalized advice and guidance on UAE Federal Corporate Tax or any other tax-related matters.