0% corporate tax rates in UAE apply to taxable income up to AED375,000 and 9% corporate tax rates in UAE apply to taxable income over AED375,000.
Corporate tax (CT) is a form of direct tax levied on the net income or profit of corporations and other entities from their business. Corporate Tax is sometimes also referred to as “Corporate Income Tax (CIT)” or “Business Profits Tax” in other jurisdictions.
Imposition of Corporate Tax Rates in UAE
Corporate Tax shall be imposed on the taxable income of businesses at the following rates:
- A 0% corporate tax rate applies to taxable income up to AED 375,000
- A 9% corporate tax rate applies to taxable income over AED 375,000
- A 15% corporate tax rate applies to all multinational corporations subject to OECD Base Erosion and Profit-Sharing laws that belong within Pillar 2 of the BEPS 2.0 framework, i.e. combined worldwide revenues in excess of AED 3.15 billion
Corporate Tax Rates in UAE for Free Zones
Corporate Tax shall be imposed on a Qualified Free Zone Person (as defined in Chapter 5) at the following rates:
- 0% on Qualifying Income
- 9% on taxable income that is not Qualifying Income
The impact of Corporate Tax on UAE businesses
With the introduction of corporate tax in the UAE, a major change is expected in the tax and compliance costs of most UAE businesses. Entities must comply with the new tax regime, which requires accurate identification of tax implications and alterations to corporate structure, operating model(s), finance/tax operations, reporting systems, legal agreements, and transfer pricing policies if required.
We have a dedicated corporate tax team based in the UAE who have in-depth experience and can support you throughout your readiness journey. If you require assistance at any stage during the Corporate Tax implementation, please get in touch with one of our tax experts.