Introduction of Corporate Income Tax In the UAE

On 31 January 2022, the Ministry of Finance of the United Arab Emirates published the Federal Corporate Income Tax (“CIT”) treatment on business’ accounting net profits or income which will be effective for the financial year starting on or after 1 June 2023.

CIT will apply to all business entities and individuals (freelance) who have commercial licenses to perform business in UAE. All activities that carryout by a legal entity will fall under the scope of CIT.

Below are the rates for CIT

• AED 0 to AED 375,000 taxable income/profit – 0%
• Taxable income of more than AED 375,000 – 9%
• Multinational companies/corporations that meet specific criteria set concerning ‘Pillar Two’ of the OECD Base Erosion and Profit Shifting project will have a different tax rate.

Similar to VAT, business entities will be subject to penalties/consequences for non-compliance to CIT treatment. Obligations and relevant consequences or penalties will be issued in due course.

If you are a business entity or an individual who carries out business activity in the UAE, Asad Abbas & Co. (Chartered Accountants) are here to provide initial consultation and impact assessment to assist you all throughout your Corporate Income Tax Requirements.