Today, Tuesday, the UAE Ministry of Finance announced the details of Cabinet Resolution No. 116 of 2022 regarding determining the amount of annual income subject to corporate and business tax in the United Arab Emirates.
The decision follows the issuance of a federal decree-law regarding corporate and business tax last month, and confirms what the Ministry of Finance previously announced about the amount of annual income subject to corporate and business tax in the UAE, as corporate and business tax in the country will apply to businesses for the fiscal years that will start from or After June 1, 2023.
According to Al-Khaleej newspaper, the “corporate and business tax” was set at 9% on taxable income that exceeds the amount of 375 thousand dirhams. This ratio ensures that the corporate and business tax system in the UAE is among the most competitive in the world, thus contributing to strengthening the UAE's position as a global financial and business center.
According to the decision, the part of the taxable income that does not exceed the amount of 375 thousand dirhams is subject to corporate and business tax at the rate of (zero%) in the tax period, regardless of whether the taxable person carries on several businesses or business activities during that period. Taxable income that exceeds the amount of 375 thousand dirhams is also subject to corporate and business tax (9%) in the relevant tax period.
For his part, Younis Haji Al-Khoury, Undersecretary of the Ministry of Finance, said: “The Cabinet’s decision regarding determining the amount of annual income subject to corporate and business tax confirms the tax rates that were previously announced. The tax rate and the amount of annual income subject to corporate and business tax in the country have been carefully determined in a way that reflects the competitiveness of the corporate and business tax system in the UAE. Determining the percentage (zero%) on corporate profits that do not exceed 375 thousand dirhams confirms the continuous support for start-ups and small companies, in appreciation of their vital contribution to the economic growth of the UAE. In addition, setting a rate of 9% on taxable income that exceeds that amount is considered a competitive advantage compared to other tax systems. The UAE corporate and business tax system provides taxpayers with certainty and confidence, which enhances the role of the UAE tax system in supporting the business and investment sector. .
The decision defines business as an activity that is practiced regularly, continuity and independently by any person and in any place, such as industrial, commercial, agricultural, vocational, professional or service activities, excavation activities or any other activity related to the use of tangible or intangible property. The decision also defines business activities as any transaction, activity, series of transactions, or series of activities carried out by a natural or legal person in the course of its business.
