Corporate Tax

In January 2022, the UAE Ministry of Finance announced the introduction of a federal Corporate Tax (CT) on the net profits of businesses. Corporate Tax is a direct tax imposed on the income or profits earned by corporations and other legal entities from their business activities.

Under the UAE Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (referred to as the “Corporate Tax Law”), businesses will be subject to Corporate Tax starting from the beginning of their first financial year that commences on or after 1 June 2023.

Scope of Corporate Tax Applicability

Corporate Tax in the UAE will apply to:

• All businesses and individuals conducting commercial activities under a valid UAE trade or business license

• Free zone entities, provided they meet all regulatory requirements and do not engage in business activities with the UAE mainland (in line with current free zone tax incentives)

• Foreign companies and individuals, only if they conduct trade or business in the UAE on a continuous or regular basis

• Banking institutions operating in the UAE

• Companies involved in real estate management, construction, development, agency, or brokerage services