UAE Planning To Introduce Income Tax

UAE’s Ministry of Finance announcement was made on January 31 about the introduction of corporate tax on business profits that will be effective for financial years starting on or after June 1, 2023. With a standard statutory tax rate of nine percent and a zero percent tax rate for taxable profits up to Dh375,000 to support small businesses and startups, the UAE corporate tax regime will be amongst the most competitive in the world.

The UAE’s Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi said that the new tax will replace most of the fees companies now pay, reported in Khaleej Times.

Based on the Ministry of Finance’s Corporate Tax FAQs, individuals will also be subject to corporate tax when they conduct business in the UAE under a commercial license (e.g., under a freelance license).

On Bloomberg TV, Mr. Al Zeyoudi clarifies that the UAE will not introduce an employee income tax, said: “It is not at the table now”.

Conclusion:

All companies need to make their books in order before the new taxes are implemented. The taxes will be charged only to companies making more than Dh375,000.

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