{"id":10366,"date":"2025-01-22T16:57:03","date_gmt":"2025-01-22T14:57:03","guid":{"rendered":"https:\/\/gls-law.company\/?p=10366"},"modified":"2025-01-22T16:57:05","modified_gmt":"2025-01-22T14:57:05","slug":"corporate-tax-in-the-uae-what-do-businesses-need-to-know","status":"publish","type":"post","link":"https:\/\/gls-law.company\/en\/corporate-tax-in-the-uae-what-do-businesses-need-to-know\/","title":{"rendered":"Corporate Tax in the UAE: What Do Businesses Need to Know?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Starting from June 1, 2023, the United Arab Emirates introduced a corporate tax on profits for the first time. This is a significant step in developing the country&#8217;s tax system, aimed at transparency and compliance with international standards. In this article, we will review who is affected by the new tax, its features, and how to prepare your business.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>What is Corporate Tax in the UAE?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Corporate tax is 9% on the taxable profit of companies. It applies if the profit exceeds AED 375,000 per year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>How Does It Work?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For example, if a company earns AED 400,000 in net profit:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The first AED 375,000 is exempt from tax.<\/li>\n\n\n\n<li>The remaining AED 25,000 is taxed at a 9% rate.<\/li>\n\n\n\n<li>The tax will amount to AED 2,250.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Who Will Be Affected by the Corporate Tax?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The new tax applies to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Resident Companies<\/strong>: Businesses registered in the UAE or managed from within the country.<\/li>\n\n\n\n<li><strong>Branches of International Companies<\/strong>: If they earn income within the UAE.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Who is Exempt from the Tax?<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Individuals<\/strong>: Salaries and income from property rentals.<\/li>\n\n\n\n<li><strong>Real Estate Income<\/strong>: If the property is not used for business purposes.<\/li>\n\n\n\n<li><strong>Companies in Free Economic Zones<\/strong>: Provided they comply with the rules of these zones.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Example<\/strong>: A company in a free economic zone (e.g., DMCC) sells goods exclusively outside the UAE. It is exempt from tax. However, if the company starts working with clients within the UAE, its income will be taxed at a 9% rate.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>How is Corporate Tax Calculated?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Key Rules<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Taxable Profit<\/strong> = Income minus Expenses.<\/li>\n\n\n\n<li>The first AED 375,000 is exempt from tax.<\/li>\n\n\n\n<li>Profit exceeding this threshold is taxed at a 9% rate.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Example<\/strong>:<br>A company earned AED 1 million and spent AED 600,000 on operating expenses.<br>Net profit = AED 400,000:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The first AED 375,000 is tax-free.<\/li>\n\n\n\n<li>The remaining AED 25,000 is taxed (tax = AED 2,250).<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>How Will Corporate Tax Impact Businesses in the UAE?<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Small and Medium Enterprises<\/strong>: Most companies with profits up to AED 375,000 will not experience changes.<\/li>\n\n\n\n<li><strong>International Companies<\/strong>: It is essential to adhere to accounting standards and accurately declare income and expenses.<\/li>\n\n\n\n<li><strong>Companies in Free Economic Zones<\/strong>: They must comply with rules to maintain their tax benefits.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Example<\/strong>:<br>The company \u201cAl-Saeed Trading\u201d operates in a free zone and sells goods outside the UAE. It will not pay tax. However, if the company starts selling within the UAE, this income will be taxed at 9%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Tax Exemptions and Benefits in the UAE<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The UAE offers several key benefits:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Companies in free economic zones that meet their requirements.<\/li>\n\n\n\n<li>Income from international shipping.<\/li>\n\n\n\n<li>Dividends received from companies within the same group.<\/li>\n\n\n\n<li>Reinvestment into the business.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Example<\/strong>:<br>The company \u201cGlobal Shipping\u201d is exclusively engaged in international shipping. Its income is exempt from tax.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>How to Prepare for Corporate Tax?<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Organize Accounting<\/strong>: Ensure proper tracking of income and expenses.<\/li>\n\n\n\n<li><strong>Check Benefits<\/strong>: If your business is registered in a free zone, confirm compliance with its rules.<\/li>\n\n\n\n<li><strong>Consult Experts<\/strong>: New tax requirements can be complex, so professional assistance is crucial.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Example<\/strong>:<br>The company \u201cKhalid Import\u201d hired an auditor to prepare financial statements in line with the new rules. This helped avoid penalties and ensure compliance with the new requirements.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Conditions for Tax Exemption for Companies in Free Economic Zones<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Companies registered in the UAE&#8217;s free economic zones may remain exempt from tax if they meet certain conditions:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Business is conducted within the zone or with international clients.<\/li>\n\n\n\n<li>Compliance with zone rules, including license renewals and report submissions.<\/li>\n\n\n\n<li>Income is derived from qualified activities, such as:\n<ul class=\"wp-block-list\">\n<li>Trade (export\/re-export).<\/li>\n\n\n\n<li>Logistics.<\/li>\n\n\n\n<li>Manufacturing.<\/li>\n\n\n\n<li>Consulting or management services.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Example<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The company \u201cGlobal Logistic\u201d in JAFZA engages in re-exporting. Its income is tax-exempt.<\/li>\n\n\n\n<li>The company \u201cEmirate Consulting\u201d provides IT services to international clients and is exempt from tax.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">If a company in a free zone operates within the UAE without paying tax, it loses its benefits and starts paying 9%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Conclusion<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The introduction of corporate tax in the UAE is a significant step toward transparency and alignment with international standards. For businesses, it is an opportunity to adapt to new conditions while preserving their benefits and ensuring compliance with tax requirements.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Starting from June 1, 2023, the United Arab Emirates introduced a corporate tax on profits for the first time. This is a significant step in developing the country&#8217;s tax system, aimed at transparency and compliance with international standards. In this article, we will review who is affected by the new tax, its features, and how [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":10354,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[229],"tags":[],"class_list":["post-10366","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-taxes"],"_links":{"self":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/10366","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/comments?post=10366"}],"version-history":[{"count":1,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/10366\/revisions"}],"predecessor-version":[{"id":10367,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/10366\/revisions\/10367"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/media\/10354"}],"wp:attachment":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/media?parent=10366"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/categories?post=10366"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/tags?post=10366"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}