Corporate tax is a form of direct tax levied on the net income or profit of corporations and other entities from their business.
Corporate tax is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions
UAE Corporate Tax will apply to all UAE businesses, except for the extraction of natural resources, which will remain subject to Emirate level corporate taxation. Foreign entities and individuals will be subject to Corporate Tax only if they conduct a trade or business in the UAE in an ongoing or regular manner.
UAE Corporate Tax will apply equally to all categories of profits and other (net) income reported in the financial statements prepared in accordance with internationally acceptable accounting standards.
What is Corporate Tax in the UAE?
Corporate Tax in the UAE is a federal tax imposed on business profits, effective from June 1, 2023, at a standard rate of 9% for taxable income exceeding AED 375,000.
It applies to most businesses except those engaged in natural resource extraction, which remain subject to emirate-level taxation. Free zone entities may benefit from exemptions if they meet specific conditions.
Good news for smaller businesses
The UAE offers Small Business Relief under Corporate Tax to support startups and SMEs. Businesses with annual revenue of AED 3 million or less can benefit from this relief, effectively treating them as having zero taxable income and exempting them from corporate tax. This relief applies for tax periods from June 1, 2023, to December 31, 2026.
However, it is not available to Qualifying Free Zone entities or businesses that are part of multinational groups. This initiative helps reduce compliance burdens and supports small business growth in the UAE.
For more details, visit https://dxbtaxes.com/
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