London Daily

Focus on the big picture.
Friday, Aug 22, 2025

UAE to introduce 9% corporate tax on business profits from June 1, 2023

UAE to introduce 9% corporate tax on business profits from June 1, 2023

Statutory tax rate of 9% makes it 'among most competitive' in world, says finance ministry

The UAE Ministry of Finance will introduce a corporate tax on business profits on financial years starting on or after June 1, 2023. The Ministry also confirmed that there will be no tax on profits of up to Dh375,000, in a move that will help small businesses.

No corporate tax will apply on personal income from employment, real estate and other investments, or any other income earned by individuals that do not arise from business or other forms of commercial activity, licensed or otherwise.

* As an international headquarter location, a UAE business will be exempt from paying tax on capital gains and dividends received from its qualifying shareholdings. And foreign taxes will be allowed to be credited against UAE corporate tax payable.

* The UAE corporate tax regime will have "generous" loss utilisation rules and will allow UAE groups to be taxed as a single entity or to apply group relief in respect of losses and intra-group transactions and restructurings.

* The UAE corporate tax regime will ensure the compliance burden is kept to a minimum for businesses that prepare and maintain adequate financial statements.

* Businesses will only need to file one corporate tax return each financial year and will not be required to make advance tax payments or prepare provisional tax returns. Transfer pricing and documentation requirements will apply to UAE businesses with reference to the OECD Transfer Pricing Guidelines.


"The UAE is moving gradually from a non-tax environment to a tax environment - that will give the UAE Government additional income to fund the country’s development activities," said Rizwan Sajan, Chairman of Danube Group. "This comes about four years after the introduction of VAT - on January 1, 2018.

Across the board tax


Until now, UAE’s corporate taxes only applied to banks and insurance companies. They are taxed at 20 per cent. Individual emirates have already impose a limited corporate tax on enterprises engaged in exploration and production of oil and gas at rates up to 55 per cent.

Although personal income tax is still absent in the Gulf, many countries have in recent years rolled out VAT (value added tax) on individuals and business activities, with Saudi Arabia tripling the rate to 15 per cent last year.

The latest UAE announcement should be seen as a natural progression to leading economies of the world wanting to set a minimum tax on corporates. It is intended to stop the practice of corporate titans – especially US technology ones – having skeletal operations in low tax regime and then paying little on their profits in their home country.


Tax deductions

Corporate taxes can be lowered through various deductions and so the effective corporate tax rate - i.e., the rate a business actually pays - is usually lower than the statutory rate, which in the UAE's case is 9 per cent.

- Justin George Varghese

The effort at a minimum corporate tax cutting across jurisdictions gained traction in the months after the pandemic broke out and nations were facing severe economic disruptions. The UAE’s latest move “brings the UAE's corporate tax regime to be in sync with global benchmarks,” said a consultant.

The GCC remains an attractive jurisdiction for foreign investment due to favorable tax regimes in most countries in the region. However, a number of reforms have been underway to create new revenue streams while reducing dependence on mainstream sources of revenues in the region. In some countries value-added taxes have already been announced, while in other countries, different forms of taxes are in place.

According to Jonathan Davidson, founding Partner at the DIFC law firm Davidson & Co., "As the UAE grows as an economy and takes a larger role on the international stage, it makes sense for the authorities to take steps to put in place a transparent system of corporate taxation.

"It is interesting to note that companies trading in free zones and not conducting business in onshore UAE will continue to be exempt. With the digitalisation of government services over the last few years, the administrative burden to businesses to file corporate tax returns will be significantly less than would have been the case in the past. This, seemingly, makes this the right time in the economy’s maturity to take a step that has already been done by other GCC countries."


Prevent 'harmful' tax practices

The new corporate tax regime takes the UAE several steps in meeting international standards on 'tax transparency' and prevent 'harmful' practices. That's according to Younis Haji Al Khoori, Under-secretary at the Ministry of Finance.

"The regime will pave the way for the UAE to address the challenges arising from the digitalisation of the global economy and the other remaining BEPS [Base Erosion and Profit Shifting] concerns. And execute its support for the introduction of a global minimum tax rate by applying a different corporate tax rate to large multinationals that meet specific criteria set with reference to the above initiative."

Newsletter

Related Articles

0:00
0:00
Close
After 200,000 Orders in 2 Minutes: Xiaomi Accelerates Marketing in Europe
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
Finnish MP Dies by Suicide in Parliament Building
Outrage in the Tennis World After Jannik Sinner’s Withdrawal Storm
William and Kate Are Moving House – and the New Neighbors Were Evicted
Class Action Lawsuit Against Volkswagen: Steering Wheel Switches Cause Accidents
Taylor Swift on the Way to the Super Bowl? All the Clues Stirring Up Fans
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Apple Expands Social Media Presence in China With RedNote Account Ahead of iPhone 17 Launch
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Cambridge Dictionary Adds 'Skibidi,' 'Delulu,' and 'Tradwife' Amid Surge of Online Slang
Bill Barr Testifies No Evidence Implicated Trump in Epstein Case; DOJ Set to Release Records
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
The CEO Who Replaced 80% of Employees for the AI Revolution: "I Would Do It Again"
Emails Worth Billions: How Airlines Generate Huge Profits
Character.ai Bets on Future of AI Companionship
China Ramps Up Tax Crackdown on Overseas Investments
Japanese Office Furniture Maker Expands into Bomb Shelter Market
Intel Shares Surge on Possible U.S. Government Investment
Hurricane Erin Threatens U.S. East Coast with Dangerous Surf
EU Blocks Trade Statement Over Digital Rule Dispute
EU Sends Record Aid as Spain Battles Wildfires
JPMorgan Plans New Canary Wharf Tower
Zelenskyy and his allies say they will press Trump on security guarantees
Beijing is moving into gold and other assets, diversifying away from the dollar
Escalating Clashes in Serbia as Anti-Government Protests Spread Nationwide
The Drought in Britain and the Strange Request from the Government to Delete Old Emails
Category 5 Hurricane in the Caribbean: 'Catastrophic Storm' with Winds of 255 km/h
"No, Thanks": The Mathematical Genius Who Turned Down 1.5 Billion Dollars from Zuckerberg
The surprising hero, the ugly incident, and the criticism despite victory: "Liverpool’s defense exposed in full"
Digital Humans Move Beyond Sci-Fi: From Virtual DJs to AI Customer Agents
YouTube will start using AI to guess your age. If it’s wrong, you’ll have to prove it
×