The domestic corporate tax regime will be effective for financial years starting on or after June 1, 2023.
27 April 2022, 12:00 AM
31 May 2022, 12:00 AM
The newly introduced corporate tax will strengthen the UAE’s economy manifold as the country would attract well-meaning businesses and corporate behemoths, said Nimish Goel, country partner at WTS Dhruva Consultants.
On January 31, 2022, the UAE announced plans to introduce corporate tax at a headline rate of 9 per cent for taxable net income greater than Dh375,000. In addition, a different rate will be proposed for very large companies that are covered under the provisions of OECD Pillar2. This rate of tax could be 15 per cent.
With the introduction of VAT in 2018, Country-by-Country Reporting, and ESR in 2019, the introduction of corporate tax was written on the wall.
The domestic corporate tax regime will be effective for financial years starting on or after June 1, 2023. The proposed tax rate is competitive and is comparable to global low tax hubs.
Goel said, ““Introduction of corporate tax is quite a progressive step. The provisions proposed to be introduced are investor-friendly and should augment the growth of the economy. The proposed headline rate of 9 per cent is competitive and the lowest amongst the GCC countries. Further, for UAE to remain a dominant force in attracting foreign capital, it was critical to remove the country’s image as a tax haven and put in place measures that make UAE a true attraction for global investment.”
He said that the headline tax rate has been kept at 9 per cent, which is the lowest amongst the GCC countries. Also, a zero per cent tax rate for small businesses and start-ups is a welcome move. Further, the compliance requirements have been kept simple with concepts like no withholding tax, no advance tax, and tax grouping, ensuring that the compliance burden on businesses is minimised.