The UAE’s Ministry of Finance (MoF) has established the taxable income level for corporate tax under the new law.
The decision comes after December 2022 issuing of the Federal Decree Law on the Taxation of Corporations and Businesses (the “Corporate Tax Law”).
Businesses will be subject to the updated UAE Corporate Tax from their first fiscal year beginning on or after June 1, 2023.
The rate is set at 9 per cent and applies to taxable income exceeding AED 375,000. Taxable income that does not exceed AED 375,000 within the same tax period shall be taxed at zero percentage, regardless of the number of firms or business activities the taxable person engages in during that period.
“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,”Younis Haji Al Khoori, Undersecretary of MoF, said.
“A zero per cent threshold for taxable profits up to and including AED375,000 is a significant indication of our ongoing support for start-ups and small businesses in recognition of their vital contribution to the UAE’s economic growth. In addition, the 9 per cent rate for taxable income above that threshold is highly competitive compared to other jurisdictions and provides taxpayers with certainty, thus cementing the UAE as a leading jurisdiction for business and investment.”