In the United Arab Emirates (UAE), there is no income tax imposed on individuals. However, the government does enforce a 5% value-added tax (VAT) on the sale of goods and services, which is applied at each stage of the supply chain and is ultimately shouldered by the end consumer. Additionally, the UAE imposes excise tax on specific goods that are deemed harmful to health.
Furthermore, there is a corporate tax of 9% on the above AED 375,000 net income or profit of corporations and other entities generated from their business activities.
- Corporate Tax – CT – 9% – On above
- Value Added Tax – VAT – 5%
- Excise Tax
Corporate Tax-CT
According to the UAE Federal Decree-Law No. 47 of 2022 on the taxation of corporations and businesses (the “Corporate Tax Law”), businesses will become subject to UAE Corporate Tax from the beginning of their first financial year that starts on or after 1 June 2023.
Corporate Tax Rate:
A 9% tax will be charged on Adjusted Taxable Net Profit above a certain threshold in a relevant year, according to cabinet decision. The Ministry of Finance has specified the CT rates as follows:
- 0% for taxable income up to a certain threshold
- 9% for taxable income above the threshold
- A different tax rate (not yet specified) for large multinationals that meet specific criteria set with reference to ‘Pillar Two’ of the OECD Base Erosion and Profit Shifting Project.
How Can We Help:
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