UAE confirms taxable income under new corporate tax law

Businesses will be subject to UAE Corporate Tax from the beginning of their first financial year starting on or after June 1, 2023

The Ministry of Finance (MoF) in the UAE has set the taxable income threshold for corporate tax under the new law. The decision follows the issuance of Federal Decree Law on the Taxation of Corporations and Business (the "Corporate Tax Law") in December 2022.

Businesses will be subject to UAE Corporate Tax from the beginning of their first financial year starting on or after June 1, 2023.

The rate has been set at 9 per cent and is applicable to taxable income above Dh375,000. A zero per cent rate will apply to taxable income that does not exceed Dh375,000 during the same tax period, regardless of the number of businesses or business activities the taxable person is engaged in during that period.

Younis Haji Al Khoori, Undersecretary of MoF, said, "The Cabinet Decision on Applicable Taxable Income Threshold for Corporate Tax confirms the tax rates that were previously announced. The rates and the threshold have been carefully decided and reflect the fairness and competitiveness of the UAE's Corporate Tax regime." Businesses will be subject to UAE Corporate Tax from the beginning of their first financial year starting on or after June 1, 2023.

The rate has been set at 9 per cent and is applicable to taxable income above Dh375,000. A zero per cent rate will apply to taxable income that does not exceed Dh375,000 during the same tax period, regardless of the number of businesses or business activities the taxable person is engaged in during that period.

Younis Haji Al Khoori, Undersecretary of MoF, said, "The Cabinet Decision on Applicable Taxable Income Threshold for Corporate Tax confirms the tax rates that were previously announced. The rates and the threshold have been carefully decided and reflect the fairness and competitiveness of the UAE's Corporate Tax regime."

The Cabinet Decision defines a "Business" as "an activity conducted regularly, on an ongoing and independent basis by any Person and in any location, such as industrial, commercial, agricultural, vocational, professional, service or excavation activities or any other activity related to the use of tangible or intangible properties", while it defines a "Business activity" as "any transaction or activity, or series of transactions or series of activities conducted by any natural or juridical person in the course of its business."