Home Middle East UAE to Introduce Federal Corporate Tax on Business Profits

UAE to Introduce Federal Corporate Tax on Business Profits

On 31st January 2022, UAE finally decided that it would implement corporate taxes from June next year. Corporate tax is a direct tax levied on the profits of business entities. Business owners, subjected to the tax, would essentially pay taxes on production, people, property and environmental impact, as well as the firm’s income. The money collected from corporate taxes is used as the source of revenue for a country. The new rate which is 9% will provide a basis to apply for support and also the move comes as the country wants to align with the international standards. For business owners paying corporate taxes will be more beneficial than paying additional individual income tax. 

The UAE for many years has kept the taxes low or almost to zero so that foreign investment is attracted to the country. This will be the first time; they will implement the cooperate taxes. People like Gulf Arab oil exporters have been benefited from its tax-free status for a long. A ministry statement carried out by state news agency WAM stated that the tax will be levied on all corporations and commercial activities in the country, except for the natural resources ones as they will remain subject to taxation at the emirate level. The move comes because the oil producer continues to diversify sources of revenue far away from oil revenue.

According to the UAE authorities, this tax is not on individuals and their incomes. This means it will not apply to the salary of the individuals as well as the other employment salary. It will be paid by the non-residents that conduct business in the UAE through a permanent establishment such as entrepreneurs or business owners in a range of industries, notably oil and banking. 

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