Corporate Tax Services

On June 1, 2023, the UAE introduced a corporate tax policy that imposes a 9% tax on business profits exceeding AED 375,000 ($100,000). This move marks a significant shift in the country’s tax framework, which historically offered a tax-free environment for most businesses.

Companies generating less than AED 375,000 in annual profits remain exempt from this tax, allowing smaller businesses and startups to continue benefiting from favorable conditions.

However, multinational corporations with profits exceeding AED 3.01 billion ($819 million) are subject to a higher tax rate of 15%. This aligns with the Global Minimum Corporate Tax Rate Agreement, an international initiative aimed at preventing large multinational corporations from shifting profits to low-tax jurisdictions. The UAE’s adoption of this framework demonstrates its commitment to global standards while ensuring it remains an attractive destination for foreign investment and international business activities.

The corporate tax applies to profits earned from the financial year starting on or after June 1, 2023. For companies whose tax year begins in January, the corporate tax will be levied on revenues generated from January 1, 2024, onwards. This phased approach allows businesses time to adapt to the new regulations and implement necessary accounting and financial adjustments.

The introduction of this tax regime represents a key milestone in the UAE's economic strategy, aimed at broadening its revenue base beyond oil while maintaining its competitive edge as a global business hub. 

It reflects the UAE’s broader efforts to diversify its economy and align itself with international tax practices. Businesses operating in the UAE are encouraged to review their financial strategies and ensure compliance with the new tax laws to avoid penalties and optimize their tax liabilities under the new regulations.