UAE companies don't pay Corporate Taxes. Free zone enterprises normally have 50-year tax moratoriums. All UAE enterprises will pay corporate income taxes from 1 June 2023.
The Corporate Tax rate in the UAE is 9%. This plan applies to firms with a net or taxable income of at least AED 375,000. 0% tax rate if your small business's taxable income is less than AED 375,000.
Individual job income isn't included. Freelancers and those whose income exceeds AED 375,000 must have a license or permission. Profits would be taxed at 9%.
Net income determines a company's tax rate. Net income is calculated by adding up all revenue streams. In addition, you also need to assess your costs spent to acquire those earnings as per expenses permissible (which may be stipulated by the final Tax Law), which include operational expenses, interest on loans, depreciation (or Capital Allowance), among others.
Net income is your taxable income after deducting all expenses. Then multiply your net income by 9%. The accounting net income (subject to modifications) must follow globally recognized accounting rules.
Any business adopting a financial year beginning on 1 June 2023 and ending on 31 May 2024 will be subject to CT beginning on 1 June 2023. In all likelihood, the first tax return will be due by the end of 2024.
Any corporation that adopts a calendar year beginning on 1 January 2023 and ending on 31 December 2023 will be subject to CT beginning on 1 January 2024, with filing likely expected by mid-year 2025.
Dubai companies seldom pay corporate taxes. Free zone enterprises haven't paid corporate taxes for 50 years. Natural resource extractors and international banks may pay corporate tax under their decree-laws.
However, as of 1 June 2023, all businesses in the UAE, including those in Dubai, will be subject to a 9% Corporate Tax.
As of now, it is uncertain if the new Corporate Tax plan would have a substantial effect on enterprises in the free zones. According to early indications, free zone enterprises may be liable to the federal Corporate Tax on revenues from operations in the UAE. Offshore income may not be taxed.
UAE Corporate Tax reforms may impact your company as well. Consult a tax professional to prepare for the transfer. UAE enterprises may request a federal tax audit from Corporate Tax accountant.
We are here to assist you every step of the way. So, use our Corporate Tax consultants and start getting ready for the new Corporate Tax in the UAE.