Corporate Tax Registration in UAE
In January 2022, The Ministry of Finance announced that the UAE government will be implementing Federal Corporate Tax (CT) on the net profit of businesses. The Corporate Tax in UAE will be effective from the 1st of June 2023. Corporate Tax or Corporate Income Tax or Business Profits Tax will be applicable on or after the 1st of June 2023 depending on the financial year followed by the businesses, and from there on, all over the country, every business apart from the exempted group will be subjected to CT. Corporate tax is a type of direct tax imposed on net income. At present, the UAE has recorded the lowest tax rate of 9%compared to other GCC countries. On recalling the G7 countries’ meeting in 2021, the Gulf countries entered into an agreement where a global minimum corporate tax return of 15% was introduced. The United Arab Emirates chose 9% over 15% to reduce its direct impact on entrepreneurs. Business entities are the ones subjected to this direct tax, while individuals’ earning income in their personal capacity, which does not require a commercial license, is not taxable
All businesses operating within the UAE, including mainland and Free Zone entities, are required to register for corporate tax, regardless of their taxable income.
- Legal Entities: Companies incorporated in the UAE or foreign entities with a permanent establishment in the UAE.
- Free Zone Businesses: Entities operating in Free Zones must register, though they may benefit from preferential tax treatments under specific conditions.
- Natural Persons: Individuals conducting business activities under a commercial license with annual revenue exceeding AED 1 million.
- Exempt Persons: Certain entities, such as government bodies and public benefit organizations, may be required to register even if exempt from tax.