Question 1

What is Corporate Tax?

Accepted Answer

Corporate Tax is a form of direct tax levied on the net income or profit of corporations and other businesses. Corporate Tax is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions.

Question 2

When is the UAE Corporate Tax regime effective?

Accepted Answer

The UAE Corporate Tax regime is effective for Financial Years starting on or after 1 June 2023.
Examples:
A Business that has a Financial Year starting on 1 July 2023 and ending on 30 June 2024 is subject to UAE Corporate Tax from 1 July 2023 (which is the beginning of the first Financial Year that starts on or after 1 June 2023).
A Business that has a Financial Year starting on 1 January 2023 and ending on 31 December 2023 will become subject to UAE Corporate Tax from 1 January 2024 (which is the beginning of the first Financial Year that starts on or after 1 June 2023).

Question 3

Who is subject to UAE Corporate Tax?

Accepted Answer

UAE Corporate Tax applies to juridical persons incorporated in the UAE and to foreign juridical persons that are effectively managed and controlled in the UAE (see question 20: ‘Who is considered a Resident Person for UAE Corporate Tax purposes?’). A foreign juridical person that operates in the UAE through a Permanent Establishment or that has a taxable nexus in the UAE would also be subject to Corporate Tax (see Section M “Foreign persons”).
Natural persons will be subject to Corporate Tax only if they are engaged in a Business or Business Activity in the UAE, either directly or through an Unincorporated Partnership or sole proprietorship. Cabinet Decision No. 49 of 2023 specifies further information on what would bring a natural person within the scope of UAE Corporate Tax.

Question 4

Will UAE entities owned by UAE or GCC nationals be subject to UAE Corporate Tax?

Accepted Answer

Yes. The application of UAE Corporate Tax does not differentiate between entities that are locally or internationally owned.
Juridical persons that are incorporated or resident in the UAE, or foreign entities that have a Permanent Establishment or taxable nexus in the UAE, will be subject to UAE Corporate Tax irrespective of the residence and nationality of the individual founders or (ultimate) owners of the entity.

Question 5

Will UAE Corporate Tax be applicable to businesses in all Emirates?

Accepted Answer

Yes. The UAE Corporate Tax is a federal tax and will therefore apply across all the Emirates.

Question 6

Will I have to pay UAE Corporate Tax alongside Emirate level taxes?

Accepted Answer

Businesses engaged in the extraction of the UAE’s Natural Resources and in certain non-extractive activities that are subject to Emirate level taxation will be outside the scope of UAE Corporate Tax, subject to meeting certain conditions.
Other businesses may be subject to both Corporate Tax and Emirate level taxation. Emirate level taxes paid will not be able to be credited against or otherwise reduce the amount of Corporate Tax Payable.

Question 7

Will UAE Corporate Tax replace VAT in the UAE?

Accepted Answer

No, Corporate Tax and VAT are two different types of taxes. Both will apply in the UAE.

Question 8

Will I have to pay UAE Corporate Tax alongside VAT in the UAE?

Accepted Answer

If you are a registered business for VAT, you will have to pay VAT and Corporate Tax separately. If your business is not registered for VAT you may still have to pay Corporate Tax.

Frequently asked questions