UAE released corporate tax law that will go into effect in June 2023

The UAE government has released a corporate tax federal decree law. According to the Ministry of Finance, the new tax would come into force for fiscal years beginning on or after June 1, 2023.

The corporate tax will aid the UAE in achieving its goals for development and change.  The new corporate tax law will bring openness and more sustainable investments to the nation, as firms will now be more cautious in their financial goals. The new corporate tax structure is based on best practices from throughout the world, and it will aid the UAE in enhancing its status as a major worldwide investment and commerce center.

According to reports, the rate is among the lowest in the Gulf Cooperation Council (GCC) zone. The corporate tax rates are as follows:
There is no tax on taxable income up to AED375,000.
A 9% tax rate is applied to taxable income over AED375,000.

The implementation of corporate tax is meant to hasten the UAE’s progress and transition while also assisting it in achieving its long-term goals. The UAE will solidify its position as a preferred jurisdiction for business and investment thanks to the stability of a viable corporate tax structure that complies with international norms and its broad array of double tax treaties.

The tax and compliance expenses of the majority of UAE firms are anticipated to significantly alter with the imposition of corporate tax in the UAE. Businesses must be in compliance with the new tax scheme, which necessitates a precise tax impact analysis as well as modifications to the company structure, finance/tax activities, reporting tools, legal contracts, and transfer pricing policies, if necessary.

The implementation of a corporate tax is only one illustration of how quickly the UAE is developing and expanding. The goal of the administration is to rebuild the country’s economy by transitioning it away from its reliance on oil and gas, and it is making efforts to position itself as a digital and financial force.

For many UAE businesses, preparing for and complying with the new federal corporate tax will be a difficult journey into a new setting. You may get a clear understanding of what to expect from the law and exactly what it will mean for the management and operation of your entire firm from Aon Consultants.