United Arab Emirates (UAE) Corporate Tax Rate
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May 16, 2022
|5 mins read
Under the proposed, United Arab Emirates Corporate Tax Law, UAE Corporate Tax Rate shall be chargeable on Annual taxable income of a business . The rate at which tax shall be applied shall be as under :
The United Arab Emirates corporate tax rate, shall be as under : –
| Tax percentage | Income on which Tax rate is applied |
| 0% | Taxable income upto AED 375,000 |
| 9% | Taxable income exceeding AED 375,000 |
| Different tax rate | Large multinationals which are covered under Pillar 2 of the OECD BEPS project |
Only Taxable income should be considered for calculating tax
The tax rate has to be applied to taxable income exceeding AED 375,000 . If a taxpayer has earned both taxable income and exempt income, tax rate has to be applied only to taxable income exceeding AED 375,000 .
UAE Corporate Tax Rate is one of the lowest tax rates in the world. Given that it is a standard rate, it would help businesses to estimate their taxes in advance, and have high degree of certainty.
Click here to know more about the taxable income under UAE Corporate Tax Law
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0% UAE Corporate Tax Rate
The Tax Rate shall be 0% on the following income, even if they exceed AED 375,000(subject to applicable conditions) : –
- Dividends income from a subsidiary, or capital gains from sale of shares of a subsidiary company
Dividends income from a subsidiary, or capital gains from sale of shares of a subsidiary company will not be subject to United Arab Emirates Corporate Tax rate of 9%.
- Non resident operator of Ships or Aircraft in International Traffic
Income of a non-resident who operates aircraft or ships in international traffic, or Leases aircraft or ships (and associated equipment), shall be exempt from tax. However, this exemption shall be available provided UAE business also receives same tax treatment in the relevant foreign jurisdiction.
- Income of foreign subsidiaries or foreign branches of UAE companies
Income from operations conducted by UAE companies outside the UAE through foreign subsidiaries or foreign branches.
- Dividends paid by a Free Zone Person that benefits from the 0% CT regime
- Dividends income from foreign subsidiary capital gains from sale of shares of a foreign subsidiary company
Dividends paid by foreign companies to UAE companies would be subject to 0% UAE Corporate Tax rate. Similarly, capital gains arising from sale of shares in foreign companies will also be exempt from CT. Both these exemptions are subject to certain conditions . The main condition to avail such benefit (known as participation exemption) is : –
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- UAE company must own at least 5% of the shares of the subsidiary company;
- The foreign subsidiary is subject to CT (or an equivalent tax) at a rate of at least 9%.
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