The government released the law last week, revealing some important details for companies to be prepared for the new tax regime.
The UAE will introduce corporate tax at nine per cent from June 1, 2023, setting a threshold of Dh375,000 profit for the companies. The threshold has been set in line with the government’s efforts to support small and medium enterprises and startups.
Last week, the government published the corporate tax law, including some crucial facts that would help the businesses get ready for the new tax system. The following are all the critical specifics regarding corporate tax that UAE citizens and businesses should be aware of:
- Corporate tax will come into effect from June 1, 2023.
- Companies and individuals that report annual profits of more than Dh375,000 are subject to a 9% tax.
Personal income from bank deposits, savings plans, investments, dividends, and foreign exchange gains will not be subject to corporate tax. Real estate income may be subject to corporation tax base if it is produced from economic activity (such as leasing, selling, transferring, etc.), as conditions are outlined in the executive decision in this regard. However, if income is derived from real estate investments where the investment manager engages in commercial operations, it can be considered exempt income.
Individuals who have a freelance permit, operate as self-sponsored businesses, and bring in more money than the threshold must pay corporate tax.