On 9 December 2022, the United Arab Emirates (UAE) issued Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (from now on referred to as the CT Law). The CT Law is the legislative basis for introducing and implementing a federal corporate tax (CT) regime applicable to business profits from financial years starting on or after 1 June 2023. The release follows the announcement made by the MoF in January 2022 about implementing a CT regime.
The key features of the UAE CT Law have been summarized by the order of the Chapters in the below table:
2- imposition of CT and Applicable Rates:
CT rates:
CT shall be imposed on the taxable income of businesses at the following rates:
- 0% on the portion of the taxable income not exceeding AED 375,000 (amount to be specified in a Cabinet Decision); •
- 9% on the taxable income that exceeds AED 375,000.
CT shall be imposed on a Qualified Free Zone Person (as defined in Chapter 5) at the following rates:
- 0% on Qualifying Income (as defined in Chapter 5);
- 9% on taxable income that is not Qualifying Income.
3- Exempt Person:
Exempt persons:
The following persons shall be exempt from CT:
- A Government entity;
- A Government controlled entity;
- A person engaged in an extractive business;
- A person engaged in a non-extractive natural resource business;
- A qualifying public benefit entity;
- A qualifying investment fund;
- A public / private pension or social security fund;
- A juridical person incorporated in the UAE that is wholly owned and controlled by an exempt person specified in (a), (b), (f) and (g) under certain conditions
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