The U.A.E. has undergone considerable tax reforms to modernize its tax system and align it with worldwide standard practices. It has also diversified its state revenue. Eunion Capital operates in one of the fastest growing economies in the world and would like to share the following taxation information in Dubai with its readers.

What is a Company Tax?

Corporate tax (C.T.) is a direct tax applied on a corporation’s or other entity’s net income or profit from their company. In some jurisdictions, corporate tax is referred to as “Corporate Income Tax (C.I.T.)” or “Business Profits Tax.”

Taxes on Corporate income

Individuals in the U.A.E. are not subject to income tax. Oil corporations and international banks, on the other hand, are subject to corporate taxes. Excise taxes are imposed on certain hazardous commodities to human health or the environment. The bulk of goods and services are subject to V.A.T.

There is no federal C.I.T. regime in the United Arab Emirates. Instead, C.I.T. is calculated on a territorial basis under the different Tax Decrees published by each Emirate’s government. Some Emirates have also passed separate Banking Tax Decrees that apply C.I.T. on foreign bank branches operating in their respective Emirates.

Most entities registered in the U.A.E. are not required to file corporate tax returns in the U.A.E., regardless of where the firm is registered.

Taxation in Dubai Free Zone

Dubai is well-known for its many free zones. Each zone is administered by its authority. One of the most significant benefits of free zone businesses is that they are often excluded from corporate income taxes or are awarded tax exemptions for up to 50 years. Profits from free zones can also be repatriated without a fee.

Taxation in DIFC

DIFC, or Dubai International Financial Centre, is one of Dubai’s most appealing and popular free trade zones, with many local and international enterprises. The taxation in this particular free zone is governed by Law No. 1 of 1999, which covers the banking sector and Dubai’s oil and gas fields. As a result, financial institutions registered in the DIFC and most international company branches in Dubai are subject to a 20% corporate income tax. Other tax benefits in the DIFC include no tax on profits repatriation and no import or export tariffs.

Introduction of Corporate Tax in the U.A.E

For the first time, the United Arab Emirates will impose a federal corporate tax on business profits starting in 2023, according to the Ministry of Finance.The country’s statutory tax rate will be 9% for taxable income exceeding 375,000 UAE dirhams ($102,000) and zero for taxable income up to that amount “to support small businesses and startups,” the ministry said, adding that “the U.A.E. corporate tax regime will be amongst the most competitive in the world.”

Implementing a federal corporate tax would benefit the U.A.E. by allowing it to earn additional money in line with its diversification strategy and future vision.

Eunion Capital is an international company with offices in Dubai, Rome, Hong Kong and Miami.  Eunion Capital is a global business that operates in the fastest growing markets in the world like Middle East, Europe, USA and Asia. Eunion Capital support and help businesses to  export, promote and sell their products in the main target markets. Eunion Capital helps businesses also to find investors  or buyers in the wealthiest markets in the world.