Do you know about new taxation law in UAE?

To strengthen UAE’s position in the global business arena, the government of UAE in a historic move announced a ‘federal corporate tax’ for some selective businesses operating in this gulf country. This tax regime will come into force from 01st June 2023. Keeping in mind the best practice followed in other developed countries, a statutory tax rate of 9% will be levied on the companies. 

In this article, we are going to discuss this new corporate tax regime with the help of our best taxation lawyers of UAE.

Relief for small and medium-sized enterprises

In the opinion of our top taxation lawyers of Dubai, this new taxation scheme is specially dedicated to protecting the interest of small and medium-sized enterprises. It is highlighted that there will be a zero-tax rate for taxable profits up to AED 375,000. The tax rate exceeding the minimum profit level is not disclosed by the ministry yet. 

No personal income tax

The Ministry of Finance clarified that there will be no tax on personal income, deriving from employment, real estate, and other investment. Further, all the incomes, except those arising from commercial activities, are outside the purview of this taxation regime. 

Exemptions

It is highlighted by our top taxation lawyers of Dubai that the businesses involved in the extraction of natural resources, such as oil and gas are exempted from paying this corporate tax as they are already subject to emirate-level taxation. The businesses operating in the free zones will also remain unaffected by this corporate tax. Further, foreign investors, who do not run their businesses in UAE, will also be exempted from this tax liability. 

No withholding tax will be imposed on domestic and cross-border payments. Moreover, the capital gains and dividends received from the qualifying shareholdings will be exempted. One of the special characteristics of this new taxation arrangement is that the UAE groups can be taxed as a single entity and they can even claim relief against losses and intragroup transactions. Our top lawyers in Dubai have pointed out that it will also increase the government's existing pool of revenue and there will be more income at the federal level to reinvest back into the economy.

Conclusion

A corporate tax regime was in pipeline for a very long time. A basic slab rate of 9% on corporate profit has been provided with certain exemptions with respect to other types of taxes, such as personal income and capital gain taxes. The Ministry has given sufficient time to the corporate entities to make themselves prepared for this new tax regime. To know further, you can contact one of our best taxation lawyers of Dubai.

 

BSB legal is a specialized taxation law firm of Dubai. Our best lawyers will assist you in advisory, litigation, and other such matters. To know more information, kindly contact one of our best taxation lawyers in UAE. You can email us at info@bsb.legal or call +97150 8014003.