United Arab Emirates Releases Corporate Tax Law – Effective from 1 June 2023

On Friday, the UAE government unveiled its corporate tax law. The same content is available on the official website. It is considered one of the key milestones in the process of implementing corporate tax in the United Arab Emirates.

Under the new rules, businesses and legal entities with taxable profits over AED 375,000 ($102,000) will have to pay the standard 9% after 1 June 2023, as previously announced earlier this year. I have.

Taxable income below the above thresholds is subject to a 0% corporate tax rate. According to the UAE Ministry of Finance, corporate tax rules are expected to position the country as a major global hub for business and investment. It adds to the country’s development and transformation goals while ensuring tax transparency and preventing fraud.

The corporate tax UAE is made available through the Federal Decree No. 2. 47 in 2022 on the official website. To download the United Arab Emirates Corporate Tax Law, please visit the Ministry of Finance website.

When does corporate tax start?

The UAE Ministry of Finance has stated that the new tax will apply to fiscal years beginning on or after June 1, 2023.

The new tax will expire on 1 July 2023 for all companies or entities whose fiscal year begins on 1 July 2023 and ends on 30 June 2024.

Businesses with a fiscal year that begins on January 1, 2023 and ends on December 31, 2023 will be permitted to start from January 1, 2024 (starting date of the first fiscal year that begins on or after June 1). Subject to UAE corporate tax. , 2023)

Key points and next steps for businesses:

With corporate tax laws already enacted, there is a lot for businesses to understand. Financial statements are becoming more and more important to businesses as the net income in these financial statements now becomes a key factor in arriving at the corporate tax that businesses are obliged to pay.

Here’s what businesses can do to prepare for UAE corporate tax:

• It is imperative that businesses plan ahead and prepare for the upcoming corporate tax rules, as they will have a significant impact on the flow of business.
• Check your previous financial records to confirm your corporate tax eligibility
• Given the increasing importance of financial reporting today, businesses need robust accounting software that ensures accuracy and compliance
• Train and keep your team up-to-date on corporate tax rules
• Evaluate how UAE corporate tax impacts your business’ obligations and responsibilities under contracts with customers and suppliers
• Understand the impact of corporate tax on your books and financial statements to stay compliant