Corporate Tax Registration in UAE
Corporate Tax Low
On December 9, 2022, the United Arab Emirates issued Federal Decree-Law No. (47) of 2022, known as the “Corporate Tax Law,” establishing the legal foundation for the commencement and administration of a Federal Corporate Tax in the UAE, to be effective from financial years starting on or after June 1, 2023.
Key Points of the UAE Corporate Tax
- A Corporate Tax rate of 9% will be imposed on Taxable Income that exceeds AED 375,000. Income below this level will incur no tax.
- Every Taxable Person, including those in Free Zones, must secure a Corporate Tax Registration Number.
- Annually, Taxable Persons are obliged to submit a Corporate Tax Return.
- Qualified Free Zone Persons are entitled to a special Corporate Tax exemption of 0% on their “Qualifying Income,” with details on this income to be determined by the Cabinet at a later date.
- Adjustments to Transfer Pricing will be required for transactions between associated entities, including domestic dealings, necessitating comprehensive documentation such as a master file and a local file.
Entities Subject to the UAE Corporate Tax
- Legal entities registered in the UAE
- Legal entities that are effectively managed and overseen within the UAE
- Individuals conducting business within the UAE, either independently or through a non-corporate partnership or sole proprietorship.
- Foreign legal entities with a permanent setup in the UAE
Entities Exempt from the UAE Corporate Tax
- Federal and Emirate Governments of the UAE, alongside their departments, agencies, and other governmental bodies
- Entirely state-owned companies engaged in activities specified by a Cabinet Decision
- Companies involved in extracting UAE natural resources and associated non-extractive operations, conditional upon regional tax compliance and other criteria
- Public Benefit Organizations recognized by a Cabinet Decision
- Investment Funds meeting predefined conditions
- Public or private pension or social security schemes that satisfy certain criteria
- UAE legal entities fully owned and governed by certain exempted organizations, contingent on specific conditions.
How Lemar Consultants Can Help
Lemar Consultants offers expertise and guidance on corporate tax and VAT within the UAE, delivering the latest updates and insights on tax developments. For further information and assistance, please reach out to Lemar. Our team of corporate tax specialists is available to provide you with advanced tax-related advice.