Corporate Tax Rate in UAE

Introduction – Chapter 2 – Imposition of UAE Corporate Tax and Applicable Tax Rates 

One of the most important provisions in the UAE Corporate Tax Law is the rate of Corporate Tax to be levied on Taxable Persons and its respective applicability to various entities operating in the UAE. According to the UAE Corporate Tax Law, Corporate Tax is to be levied on Taxable Persons if their Taxable Income exceeds AED 375,000.

Article 2 – Imposition of Corporate Tax

As per Article 2 of the UAE CT Law, Corporate Tax will be levied on the Taxable Income, payable to the Federal Tax Authority under the UAE Corporate Tax Law and Tax Procedures Laws. As of now, Corporate Tax has not been made effective. But from June 1, 2023, onwards, Persons who exceed the limit of AED 375,000 shall be liable to pay corporate tax under the UAE Corporate Tax Law.

This Article also provides that Corporate Tax due shall be payable to the FTA.

Annual Imposition: Corporate Tax would ordinarily be imposed annually. 

Self-Assessment: The Corporate Tax liability is to be calculated by the Taxable Person on a self-assessment basis. It means that the calculation and payment of Corporate Tax are done by filing a Corporate Tax Return by the Taxable Person. This is followed by payment of any amount due to the FTA. 

Article 3 – Corporate Tax Rate under the UAE Corporate Tax Law

The corporate tax rate refers to the rates to be levied on corporate entities operating in the UAE.

Threshold and Rate of Corporate Tax on Taxable Income:

1. If the Taxable Income does not exceed AED 375,000, the Corporate Tax rate will be zero percent (0%) for the corporate entities.
2. If it exceeds the specified threshold i.e., AED 375,000, the Corporate Tax will be nine percent (9%) for the companies.

Rate of Corporate Tax on Qualifying Income:

1. For Qualifying Free Zone businesses, the Qualifying Income earned will be subject to Corporate Tax at zero percent (0%). The income that constitutes Qualifying Income is discussed under Article 18(1)(b).
2. In case of any income earned by the Qualifying Free Zone Person which is not Qualifying Income (as per Article 18 or so held by a decision of the Cabinet), then the Corporate Tax will be levied at nine percent (9%) on the Taxable Income.

What will be the Corporate Tax Rate applicable to your business in the UAE under the UAE CT Law?