Corporate Taxes Get Extended
A new corporate tax in the UAE has been announced that will affect foreign businesses and expatriates. The new tax is aimed at raising $13 billion for the government. Previously, corporate taxes were only applicable to oil companies, banks, and free zones, but the new law will cover all businesses, including startups and established companies. Businesses that earn less than $102,000 per year will be exempt from this tax, and businesses engaged in natural resources extraction are exempt as well.
The UAE has been trying to diversify its economy away from oil. It doesn’t want to rely too heavily on investment income and corporate dividends. However, these two sources of income are volatile. The new law allows companies a year and a half to prepare for the new tax rate. Reactions have been mixed.
A new corporate tax regime in the UAE will take effect for financial years beginning in June 2023. The tax regime will impose a standard corporate tax rate of 9%. The new tax rate only applies to taxable profits over AED 375,000; profits below that amount are tax free. The new corporate tax regime will also reinforce the UAE’s status as a global business center. The UAE has also signaled support for the OECD BEPS 2.0 project and has agreed to adopt the global minimum effective tax rate.
Did Corporate Taxes Get Extended in the UAE?
This new corporate tax regime incorporates international best practices and minimizes the compliance burden on businesses. Although the announcement on Monday caused a stir, many in the business community in the UAE say this development should have been anticipated. The introduction of corporation tax in the UAE has been in discussion for several years and is already in place in other GCC countries.
Although the UAE has a corporate tax regime that exempts some types of income, most businesses in the free zones will not be required to register. In addition, they will be eligible to benefit from the tax incentives provided by the free zone. However, the tax will remain unaffected for those who do not do business with mainland UAE.
what is the coroporate tax in the UAE
The new corporate tax regime will impact business operations and mergers and acquisitions activities. In addition, the tax will affect individual income and dividends, as well as capital gains. Businesses will be required to have an effective record-keeping data architecture. In addition to this, the UAE government will likely adopt tax technology best practices.
In recent years, the UAE government has taken steps to encourage foreign businessmen to stay and invest in the country. This includes reforming its foreign ownership laws, which will eliminate the requirement that a company has at least one Emirati shareholder. Moreover, the government has announced plans to allow foreigners to receive citizenship in 2020.