The ministry said that the corporate tax policy adopted by the UAE reflects the accepted principles within the best international practices, noting that the system was developed with a view to reducing the burden of compliance on business.
Corporate tax on business profits will be calculated based on its financial statements prepared in accordance with internationally accepted accounting standards.
The ministry explained that exceptions and amendments will be applied within a limited scope, knowing that the tax will apply to all businesses and commercial activities, with the exception of natural resource extraction activities, which will remain subject to corporate tax at the level of the local emirate.
She noted that the corporate tax system applied in the country will be among the most competitive systems internationally, as the tax will be applied at a basic rate of 9% and 0% on taxable profits that do not exceed 375,000 dirhams to support start-ups and small businesses.
The Ministry of Finance stated that it will not impose corporate tax on personal income earned from a job, on any other personal income earned through real estate or other investment activities, or on any other income earned by individuals that does not arise from business or any other form of activity. The commercial licensed or permitted in the country, according to the Emirates News Agency “WAM”.
Younis Haji Al-Khoury, Undersecretary of the Ministry of Finance, said that the UAE “plays a fundamental role in supporting business growth locally and internationally, as a leading country for innovation and investment.”
He stressed that “the certainty of a competitive corporate tax system that reflects best practices, coupled with a wide network of double taxation agreements, will enhance the UAE’s position as a leading hub in the world for business and investment.”
And he indicated that with the introduction of the corporate tax, “the state renews its commitment to meet international standards for tax transparency and prevent harmful tax practices, and the corporate tax system paves the way for the UAE to face the challenges arising from the digitization of the global economy and issues of tax base erosion and transfer of other profits, and reflects the state’s support in applying the rate of A global minimum tax by applying a different rate of corporate tax to large multinational companies that meet specific criteria established in accordance with the principles of the Base Erosion and Profit Shifting Initiative.
He pointed out that “in recognition of the importance of the role that free zones play in supplementing the UAE economy and its competitiveness, the corporate tax system in the country will continue to provide corporate tax incentives currently offered to businesses established in free zones that comply with all regulatory requirements and do not conduct commercial activities in the territory of the UAE.” Main”.
He pointed out that to ensure the country’s position as an attractive international location for the establishment of corporate headquarters, “businesses in the country will be exempted from paying tax on capital gains and dividends received from their qualified shares, and foreign taxes paid from corporate tax due in the UAE will be allowed to be deducted.”
Al Khouri also stressed that the UAE corporate tax system “will include generous rules for the use of losses and will allow groups of companies established in the country to subject them to corporate tax as a single tax entity or apply an exemption to one group with regard to losses, intergroup transactions and restructuring transactions.”
The corporate tax system in the UAE will ensure, according to Al-Khoury, “that a minimum burden of compliance is maintained on businesses that adequately prepare and maintain financial statements, and that businesses must submit only one tax return per fiscal year, and will not be required to make advance tax payments or submit temporary tax returns, Transfer pricing and documentation requirements will be applied to businesses in the country in accordance with the Transfer Pricing Guidelines of the Organization for Economic Cooperation and Development.