The FTA has released the UAE “Corporate Tax Law”
In a historic act, the Federal Tax Authority (FTA) of the UAE has released its most anticipated corporate tax law. The Federal Decree-Legislation No. 47 of 2022 on Taxation of Corporations and Businesses, commonly referred to as the “corporation tax law,” was published by the UAE. The corporate tax law, according to the Ministry of Finance, is a pivotal step in creating an integrated tax system that aligns with the UAE’s goals and objectives, boosts its global involvement in the marketplace, and gives the country’s economy enough room to engage with and endorse financial market mechanisms well within the framework of the nation.
The statutory rate of corporate tax in the UAE is 9% for taxable profits over Dh375, 000. To aid small firms and start-ups, revenues up to and including that amount will be taxed at 0%. This implies that, starting with their first fiscal year that begins on or after June 1, 2023, enterprises will be liable for UAE Corporate Tax.
Unquestionably, the establishment of a corporate tax for all businesses in the UAE represents a major overhaul to the country’s tax laws. Considering the UAE’s diverse portfolio and the significance of promoting stable growth, the corporate tax system was designed with the guiding principles of justice and equality throughout industries as a reference. As part of the country’s cooperation for the OECD Inclusive Framework on Base Erosion and Profit Shifting, the UAE’s promises to enact a global minimum tax for multinational corporations, promote tax transparency, and eliminate aggressive tax practices are reflected in the Corporate Tax Law.
Bottom Line
The UAE’s authorities have made a number of changes in an effort to satisfy international standards for tax transparency, the most recent of which is the implementation of the corporate tax structure. It comes after the introduction of the 5% import customs charge and the 5% VAT rate in 2018. Numerous global enterprises migrate to or establish new operations in the UAE every year to reap the benefits of the country’s advantageous tax laws, cutting-edge infrastructure, and proximity to the world’s largest economies.
Nevertheless, businesses that function in the UAE will be significantly impacted by the introduction of corporation tax. Therefore, it’s crucial for companies to comprehend how the new taxes would affect them.
Jumeira Consultants’ experts can provide you with advice on how the new corporate tax will affect your firm and how to properly equip to make sure that it has the necessary structure and processes in place to handle your future tax responsibilities.
Please get in touch if you want assistance with any concerns relating to the implementation of corporate tax in the UAE or for any other connected company formation services in Dubai.
