Corporate Taxation in Dubai | The information in this article is intended as a guide to the UAE Corporate Tax (CT) regime. The Federal Decree-Law No. 47 of 2022′ regarding the taxation of companies and companies (corporate tax law) can be found via this link.
Nothing in this article should be construed as legal or tax advice, and the guidelines should not be assumed to be all-encompassing or to provide a definitive answer in all cases.
This article sets out the general scope of application of the Corporate Tax Act. It establishes that corporate income tax is levied on the taxable income earned by a taxpayer in a tax period.
Corporate Tax in Dubai
Residents and Non-Residents are each taxed on a different basis.
- A ‘Resident’ is taxed on income from both domestic and foreign sources (residence basis).
- A ‘Non-Resident’ is only taxed on income from sources within the UAE (source basis).
UAE resident companies such as LLCs and other legal entities in the UAE will be subject to Corporate Tax as a ‘Resident’.
An entity incorporated in the UAE is automatically considered a ‘Resident’ for Corporate Tax purposes. Similarly, a person engaged in any business or business activity in the UAE will also be considered a ‘Resident’ for the purposes of Corporate Tax.
A foreign company can be treated as a ‘Resident’ for Corporate Tax if it is effectively “managed and controlled” in the UAE.
Who does the Corporate Tax in Dubai apply to?
In summary, Corporate Tax applies to:
- UAE legal entities (including Free Zones) incorporated or otherwise established or recognized under applicable law in the UAE;
- Non-UAE legal entities incorporated outside the UAE but effectively managed and controlled in the UAE;
- Natural persons conducting a business or business activity in the UAE;
- Non-Residents who have a permanent establishment in the UAE or who earn income from the UAE that falls within the scope of Corporate Tax.
Exemptions from Corporate Tax in Dubai
Exemptions from Corporate Tax are granted for certain categories of persons when there are public interest and policy reasons not to subject these categories of persons to taxation.
In addition, Corporate Tax does not apply to:
- An individual income, salary and other income from work;
- Interest and other income earned by an individual from bank deposits or savings programs;
- The income of a foreign investor from dividends, capital gains, interest, royalties and other investment income;
- Investments in real estate assigned by individuals as personal/private property;
- Dividends, capital gains and other income earned by persons from holding stocks or other securities in their personal capacity.
Rates for Corporate Tax
0% up to and including AED 375,000 | Taxable income or qualifying income from a qualifying Free Zone
9% over AED 375,000 | Taxable income or non-qualifying income from a qualifying Free Zone
Natural persons conducting business or conducting business activities are subject to Corporate Tax only if their combined turnover in a calendar year exceeds AED 1.000.000 (MoF, 2023)
*A “natural person” means an individual or individuals (including, for example, a Sole Establishment).
Small Business Relief
The exemption is intended to support start-ups and other small or micro-enterprises and allows the taxpayer to opt for the small business scheme, which treats the taxpayer as if it had no taxable income in respect of each relevant tax period in which the conditions of this exemption are met.
Would you like to know how the Corporate Tax in Dubai affects you and to what extent you are subject to the Corporate Tax in Dubai? Book a free consultation via this link.
We are happy to look at your personal situation and advise you on what is applicable in your case and how to deal with it.