Introduction – Chapter 2 – Imposition of Corporate Tax and Applicable Rates under UAE Corporate Tax
One of the most important provisions in the UAE Corporate Tax Law is the rate of Corporate Tax to be levied on Taxable Persons and its respective applicability on various entities operating in the UAE. According to the UAE Corporate Tax Law, Corporate Tax is to be levied on Taxable Persons if they exceed a specific threshold as has been prescribed by the Cabinet. It is levied on the net profits of such Taxable Person. If such Person exceeds the decided threshold, they will have to pay Corporate Tax as per the tax rate in the UAE Corporate Tax Law.
Article 2 – Imposition of Corporate Tax
As per Article 2 of the UAE CT Law, Corporate Tax will be levied on the Taxable Income, payable to the Federal Tax Authority under the UAE Corporate Tax Law and Tax Procedures Laws. As of now, Corporate Tax has not been made effective. But from June 1, 2023, onwards, Persons who exceed the specified threshold shall be liable to pay corporate tax under the UAE Corporate Tax Law.
Article 3 – Corporate Tax Rate under the UAE Corporate Tax Law
The corporate tax rate refers to the rates to be levied on corporate entities operating in the UAE.
Threshold and Rate of Corporate Tax on Taxable Income:
- If the Taxable Income does not exceed a particular threshold that is yet to be prescribed by the Cabinet, the Corporate Tax rate will be zero percent (0%) for the corporate entities.
- If it exceeds the specified threshold, the Corporate Tax will be nine percent (9%) for the companies.
Rate of Corporate Tax on Qualifying Income:
- For Qualifying Free Zone businesses, the Qualifying Income earned will be subject to Corporate Tax at zero percent (0%).
- In case of any income earned by the Qualifying Free Zone Person which is not Qualifying Income (as per Article 18 or so held by a decision of the Cabinet), then the Corporate Tax will be levied at nine percent (9%) on the Taxable Income.
What will be the Corporate Tax Rate applicable on your business in the UAE under the UAE CT Law?Contact us today to know