UAE will introduce a corporation tax on business profit from the financial year starting on or after June 1, 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)
The corporate tax has been set at a standard rate of 9 percent. However, a zero percent tax rate will be applicable on taxable profits up to Dhs375,000,
Example:
- If a business’s Net Profit for a financial year is AED 400,000 corporation tax will apply as 400,000 – 375,000 = 25,000 * 9% = 2,250
The corporate tax will be payable on the net profits of UAE businesses as reported in their financial statements, prepared in accordance with IAS (internationally accepted accounting standards), This report will be submitted to UAE FTA (Federal Tax Authority) on annual basis at the time of the Annual Tax Return.
Please feel free to contact us with any questions you may have about the preparation of the Financial Statement as per IAS. Our professionally certified team of Chartered Accountants would love to help you. We rise by lifting others!
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