Federal Corporate Tax UAE: Introduction | Accountantant's Box

Federal Corporate Tax UAE – Basic Introduction? | Accountantant's Box

Federal Corporate Tax UAE

Federal Corporate Tax UAE: On 31 January 2022, the UAE Ministry of Finance (MoF) has announced a new tax i.e the Federal Corporate Tax UAE which will be applicable in the UAE and it will be effective and starting on or after 1 June 2023.

It will be a turning point in UAE’s history for having a successful track record, and UAE has always been integrated with global trade and practices, while lowering compliance burden on organisations and making them much more transparent.

UAE: Introduction of Federal Corporate Tax UAE?

Federal Corporate Tax UAE rate as per Corporate Income TAX:

There will be a progressive rate which is described as follows:

• 0% for taxable income up to AED 375,000;
• 9% for taxable income above AED 375,000; 

There will be a different tax rate for Federal Corporate Tax UAE that would also apply for big multinationals which meet specific criteria with reference to 'Pillar Two' of the firm. This is for Economic Co-operation and Development (OECD) Base and Profit Shifting projects.

Tax rates are considered to be one of the competitive and lowest rates worldwide, but it has great flexibility. And this is actually a good move

which will surely benefit large companies, as tax data will not only help them to demonstrate their financial performance,but also will get them to start with financing. Complete details on the same are yet to be announced by the FTA.

How Corporate Federal Corporate Tax UAE will impact other Gulf Cooperation Council Nations?

Federal Corporate Tax UAE which will be applicable in the UAE and it will be effective and starting on or after 1 June 2023.

But somehow, at 9%, the UAE corporate tax rate can be the lowest when we compare it to other countries, especially in the Gulf Cooperation Council (GCC).
Investors shall not be apprehensive regarding their businesses as the UAE is still the most competitive country among all the GCC nations when it comes to taxes.

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