Tax-Free No More: Clarifying UAE’s Ground-breaking Corporate Tax Shift

As of the 1st June 2023, a major shift is happening in UAE. The Federal Tax Authority (FTA) will introduce a 9% corporation tax.

We are explaining the implications of this substantial policy change.

1.For Business Owners

This new mandate is applicable to all business entities across the UAE, including those within onshore and Free Zone jurisdictions.

Who is affected?

  • On-shore entities, as well as Free Zone entities involved in transactions with on-shore entities, will be subjected to a 9% corporation tax.

Who is exempted?

  • Free Zone entities engaged exclusively in overseas business transactions will be subject to a 0% corporation tax. However, these entities must submit their accounts to the FTA, justifying this exemption.

2. For High-Earning Individuals and Business Owners:

Who is affected?

  • Business Owners: If your business turnover exceeds Dh1 million ($272,294) per year, you’ll be subject to the new 9% corporate tax. This rule is based on UAE’s Ministry of Finance and Cabinet Decision No. (49) of 2023.
  • High-Earning Individuals: If you earn over Dh1 million from an online business, for instance, that income will be taxed.

Who is exempted?

  • Personal Income: Income from employment, investments, and real estate (without licensing requirements) will not be taxed. For example, income from rental property and personal investments is exempted.

3. Salaried Professionals:

For UAE residents drawing a single income stream from salary, the current tax status remains unchanged with a tax rate of 0%.

Remember, from 1st June 2023, everyone must show their accounts to the FTA. If your 2023/2024 accounts don’t match your 2022 accounts, you could face fines or worse.

Failure to comply or register for corporation tax could lead to considerable financial penalties. Prompt action is advisable.

How can IBCCS TAX CY help?

IBCCS TAX CY can assist you in this big change, and provide services to UAE Entities and individuals ensuring compliance with UAE development.

For further enquiries, please contact us by email on or call our office in Cyprus on +357 222 58 777.

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