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Under the UAE Federal Decree-Law No. 47 of 2022, known as the "Corporate Tax Law," significant changes are in store for businesses. Starting from the commencement of their initial financial year on or after June 1, 2023, companies will come under the ambit of UAE Corporate Tax.
Last year, the UAE unveiled its plan to impose a nine percent corporate tax on businesses and freelancers earning Dh 375,000 or more. Consequently, these entities must undertake tax registration.
It's worth noting that exemptions exist under the Corporate Tax Law. Government entities, government-controlled organizations, as well as extractive and non-extractive natural resource businesses that meet specific criteria are exempt and not mandated to register.
Additionally, non-resident individuals earning UAE-sourced income without a permanent establishment in the UAE are also exempt from registration.
The Ministry of Finance, UAE, has recently taken steps to support small and micro businesses, startups, and freelancers. Ministerial Decision No. 73 of 2023 outlines relief measures for businesses and individuals with revenues of Dh 3 million or less. This initiative, known as the Small Business Relief, aims to alleviate the corporate tax burden and compliance expenses for start-ups and small businesses.
As the UAE embraces Corporate Taxation alongside the introduction of VAT in January 2018, stay tuned for further announcements and clarifications in the upcoming days and weeks. Companies should prepare for the evolving landscape of the UAE corporate tax system, as it aims to bolster the country's economy
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