In Brief

The UAE Ministry of Finance (MoF) announced on 31st   January 2022 the implementation of a federal corporate tax (CT regime in the UAE, which will take effect from the financial years beginning on or after 1st    June 2023.

The UAE CT regime will be based on international best practises, with enterprises facing a low / minimal compliance and tax burden.

Further details are expected by the 3rd  quarter of 2022.

In Detail

The UAE is considering enacting a federal CT that will take effect for fiscal years beginning on or after

June 1, 2023.

The UAE CT will apply across all Emirates and to all corporate and commercial operations, with the exception of natural resource exploitation, which will continue to be taxed at the Emirate level.

UAE CT will be applicable at the following rates:

Free zone enterprises will be subject to UAE CT and will be required to register and file a CT return, although they will continue to enjoy CT holidays and 0% taxation if they follow all regulatory requirements and do not conduct business in the mainland UAE.

• Employment income, income from real estate, income from savings, investment returns and other income earned by individuals in their personal capacity that is not attributable to a UAE trade or business
• Dividends, capital gains and other investment returns earned by foreign investors.

Exemption from UAE CT will be available for:

• Capital gains and dividends earned from qualifying shareholdings;
• Qualifying intra-group transactions and restructurings.

Interest, dividends, royalties, and other payments made domestically and cross-border will not be subject to withholding tax in the UAE, and international tax credits will be available for taxation imposed by UAE enterprises on revenue received outside the UAE.

Transfer pricing (TP) rules and documentation requirements will be in conformity with the

OECD TP Guidelines in the UAE CT system.