United Arab Emirates – New Corporate Tax Regime

In December 2022, the United Arab Emirates (UAE) government announced its first-ever corporate tax regime, introducing a corporate tax rate of 9%.

This new corporate tax regime is now in effect for businesses with fiscal year starting on or after 1^st of June 2023 and applies consistently across all Emirates.

Juridical persons and natural persons, that are either Resident Persons or Non-Resident Persons must now apply to register for Corporate Tax with the Federal Tax Authority. These persons must do so within specific timeframe based on the Month of License Issuance.

Certain persons may be exempt from the corporate tax however each company must first register, before they can apply for exemption to the Federal Tax Authority of UAE.

In addition to registration, companies subject to the new corporate tax must:

• Maintain proper accounting records
• Accurately file tax returns
• Pay applicable taxes in a timely manner.

Who do the requirements apply to?

• All businesses and individuals conducting business activities under a commercial license in the UAE;
• Free zone businesses
• Foreign entities and individuals conducting regular trade or business in the UAE
• Banking operations;
• Businesses engaged in real estate management, construction, development, agency and brokerage activities.

The risk of non-compliance

Failure to comply with these requirements can result in penalties of up to AED 10,000 depending on the violation.