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TAXATION
TAXATION in UAE
The United Arab Emirates (UAE) has recently introduced indirect and direct taxes, moving from its historical status of tax heaven on earth to tax jurisdiction from 2018 onwards. Effective 1 June 2023, a 9% corporate tax was implemented for taxable income over and above AED 375,000. The Federal Tax Authority (FTA) administers the federal tax system, including VAT and corporate tax.
An overview of the key taxes applicable for businesses and individuals in the UAE as per the
snapshot below:
Types of Taxation in UAE
1
Value Added Tax (VAT)
2
Corporate Tax
3
Additional Exemptions
4
Excise Taxes
5
Personal Income Tax
6
Other Tax
Value Added Tax (VAT)
Implemented on January 1, 2018:
- Standard-rated supplies based on place of supplies in UAE: 5%
- Zero-rated supplies for the export of goods and services and specific residential properties.
- Certain Health Care Services, Financial Services, Public transport services, international transport, residential buildings, sale of bare land are exempted from value-added taxes
- Reverse Charge Mechanism on certain goods and services.
Voluntary VAT registration in the UAE is available for businesses whose annual taxable supplies or expenses fall between AED 187,500 and AED 375,000. This provision allows smaller businesses and startups to register for VAT even if they haven’t reached the mandatory registration threshold of AED 375,000
Corporate Tax
The UAE introduced a federal corporate tax effective from June 2023:
- 0% rate for taxable income up to AED 375,000
- 9% rate for taxable income above AED 375,000
- 15% top-up tax rate for large multinational enterprises meeting specific criteria based on OECD guidelines.
The UAE corporate tax became effective for financial years starting on or after June 1, 2023. Qualified Free zone businesses that don’t conduct business with the UAE mainland may be exempt from corporate tax if they fulfil conditions stipulated in Federal Decree-Law No. 47 of 2022.
The following categories of businesses are exempt from corporate tax subject to meeting the conditions laid down under corporate law;
- Small businesses with taxable income up to AED 375,000
- UAE government entities and government-controlled entities not conducting business activities under a license
- Businesses engaged in natural resource extraction, subject to Emirate-level corporate tax
- Non-extractive natural resource businesses meeting specific conditions
- Qualifying public benefit entities created for charitable, religious, cultural, athletic, healthcare, or educational purposes as stipulated under Cabinet Decision No. 37 of 2023
- Qualifying investment funds, Private Pension Funds and REITS under regulatory supervision and fulfilling conditions
Additional Exemptions
- Foreign branch profits from jurisdictions with UAE tax treaties based on election.
- Dividends received from other UAE corporations
- Capital gains on shares held for at least 12 months
- Participation exemption on certain foreign investments.
To maintain exemption status, entities must meet specific criteria and comply with regulations set by the UAE Corporate Tax Law.
Excise Taxes
The UAE levies excise taxes on specific products:
- 50% on carbonated drinks and products with added sugar
- 100% on tobacco products, energy drinks, electronic smoking devices, and vaping liquids
Customs Duties
- 5% flat rate on most goods (based on CIF value)
- 50% on alcohol
- 100% on cigarettes
Personal Income Tax
Currently, there is no personal income tax in the UAE. However, natural persons conducting business activities with a turnover exceeding AED 1 million may be subject to the 9% corporate tax rate.
Other Taxes
- Some emirates charge additional taxes on alcohol sales and tourism
- Certain emirates impose a 20% flat corporate tax on foreign banks
- Real Estate Department Levy on residential and commercial property transactions.
Why Choose ALPHA EQUITY MC?
At ALPHA EQUITY MC, we understand that the compliance process in the UAE can be frightening, especially for businesses that need to become more familiar with the local regulations and requirements. That’s where we come in. Our team of experienced professionals provides comprehensive support tailored to your specific needs. Here’s why we stand out:
- Expertise
With years of experience in the field, our team possesses in-depth knowledge of the UAE’s business laws, compliance and regulations. We stay updated on any changes or developments to ensure your business remains fully compliant.
- Personalised Approach
We recognise that every business is unique, so we take a personalised approach to each client. From initial consultation to final registration, we work closely with you to understand your business goals and tailor our services accordingly.
- Efficiency
Time is of the essence in the business world, and we value yours. Our streamlined processes and efficient workflows ensure that your VAT Registration Process in UAE is completed promptly, allowing you to focus on what matters most – growing your business.
- Openness
We always support open communication and openness. You can trust us to provide clear guidance, answer any questions you may have, and keep you informed throughout the entire process.
Contact us
Navigating the regulatory requirements in UAE doesn’t have to be a daunting task. With ALPHA EQUITY MC as your trusted partner, you can rest assured that your VAT registration, Uae Corporate Tax registration and compliance, AML requirements, and other compliances will be handled with professionalism, efficiency, and expertise. Let us take the stress out of compliance so you can focus on what you do best – running and growing your business. Contact us today to learn more about our services and how we can help you succeed in the UAE market.