Corporate Tax Services

The Ministry of Finance of the UAE announced the introduction of a Federal Corporate Tax regime on business profits effective for Financial Years starting on or after 1 June 2023. An introduction of a 9% federal corporate tax in the UAE on business profits with a threshold of AED 375,000.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.
– Taxable income up to AED 375,000 Corporate Tax Rate (0%)
– Taxable income over and above AED 375,000 Corporate Tax Rate (9%)
The UAE Ministry of Finance will issue more information on the UAE corporate tax 2023 update towards the middle of the year to help businesses to prepare in advance to accomplish the compliance process earlier. The UAE CT regime will become 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 will become subject to UAE CT 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 (calendar year) financial year starting on 1 January 2023 and ending on 31 December 2023 will become subject to UAE CT from 1 January 2024 (which is the beginning of the first financial year that starts on or after 1 June 2023)

We at LMC will make sure that our clients will be fully compliant and we should keep a close watch on the details which are yet to be released. For now, it has been made clear that the UAE corporate tax regime shall follow best global practices and most likely to be implemented with ease in compliance requirements.
The corporate tax will be payable on the profits of UAE businesses as reported in their financial statements prepared in accordance with internationally accepted accounting standards. There will be minimal exceptions and adjustments. This clearly means that financial statements must now be scrutinized on time, without exception.