UAE intends to introduce the lowest corporate tax rate in the world.

UAE intends to introduce the lowest corporate tax rate in the world.

The UAE, or United Arab Emirates, is well-known as a tax haven for individuals and corporations.

Now, the federal government intends to tax corporations’ net profits.

The UAE government will begin levying this taxon 1st June of the fiscal year 2023.

The finance ministry said that net profits of 375,000 Dh ($102,000) would be tax-exempt.

This is a significant boost for small and medium-sized firms, allowing them to expand without regard for taxation. Corporates that exceed the threshold will be asked to pay a 9 percent tax. This simplifies the process of company formation in the UAE and creates new opportunities for business setup in Dubai.

What are the salient features of this proposed tax reform?

Several aspects will help the entrepreneur form a Mainland Company Formation in Dubai.

  1. Tax Incentives:- In the event of free zones, a 9% tax will be levied on firms operating within the free zones that derive economic benefits from the mainland. The current benefits for free zone businesses will be maintained for those that adhere to all regulatory requirements and do not conduct business with the mainland.
  1. Low Compliance Expenses:- The corporation tax in the UAE will ensure that compliance costs for multinationals that develop and keep acceptable financial records are maintained to a minimum. Corporate tax will be charged on the profits declared by UAE corporations in their financial statements. Additionally, the reports should adhere to international standards and make necessary revisions.
  2. Loss Control Regulations:- the UAE’s corporate tax framework will have favorable utilization regulations. Additionally, UAE groups will be taxed as a consolidated company. Additionally, they can use collective relief to recover losses, conduct intra-group transactions, and reorganize.
  3. Corporate Income Tax in the UAE:- In terms of profit, corporation tax on businesses in the UAE will be calculated on the adjusted accounting net profit of the business. For instance, a company’s annual revenue is AED 1 million (INR two crores). After deducting all expenses (rent, salary, etc. ), the company’s net profit is AED 3,00,000. (INR 60 lakhs). The firm will be tax-exempt in the UAE.
  4. Individual Earnings: Individuals will continue to be tax-exempt on earnings from employment, real estate, stock investments, and other forms of personal income unrelated to UAE trade or company. As a result, the UAE’s income tax rate remains zero percent. Foreign investors that do not conduct business in the UAE will also be tax-exempt.

Are you prepared to establish a business in the United Arab Emirates?

Suppose you are considering Free Zone Company Formation in Dubai in the UAE. In that case, Esq Tech FZ LLC is a pioneer in setting up your business, from registration to identifying an appropriate location for your organization. Please do not hesitate to contact us if you have any doubts or queries.

Conclusion:- We feel that after reading this blog, you will better understand the UAE’s corporate taxation system for businesses.

Book a free consultation by filling the form here, or you can directly call at +971-569540800. For email assistance, please mail your query at


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