No, Corporate Tax (CT) and Value Added Tax (VAT) are distinct types of taxes. Both will remain in effect in the UAE.

Taxpayer Applicable CT Rate Individuals and Juridical Persons 0% for taxable income up to and including AED 375,000 (this threshold is subject to confirmation in a Cabinet Decision) 9% for taxable income exceeding AED 375,000 Qualifying Free Zone Persons (see further details below) 0% on qualifying income 9% on taxable income that does not qualify as qualifying income

Non-resident persons will only be liable for UAE Corporate Tax (CT) on: income generated from their Permanent Establishment in the UAE; or income sourced from within the UAE, which is subject to a 0% withholding tax.

Any UAE resident juridical person or individual with revenues below the threshold established by the Minister, and who meets any additional conditions that may be specified, can apply for small business relief.

A recognized stock exchange includes: UAE: Any stock exchange located in the UAE that is licensed and regulated by the relevant competent authority (e.g., Nasdaq Dubai, Abu Dhabi Securities Exchange, or Dubai Financial Market); Foreign: Any stock exchange established outside the UAE that is of comparable standing to those in the UAE.

For UAE Corporate Tax (CT) purposes, a foreign partnership will typically be treated as an Unincorporated Partnership, provided it meets specific conditions, including that it is not subject to tax in the relevant foreign jurisdiction (see the question ‘How will the UAE CT regime apply to partnerships?’ under the section on Partnerships).

The Corporate Tax Law differentiates between unincorporated and incorporated partnerships. “Unincorporated Partnerships” (as defined in the Corporate Tax Law) refer to a contractual relationship or arrangement between two or more individuals, rather than being a distinct juridical entity separate from their partners or members. For UAE Corporate Tax (CT) purposes, unincorporated partnerships are treated as ‘transparent.’ This means they are not subject to UAE CT as entities; instead, each partner is liable for UAE CT on their share of the income generated through the partnership. Incorporated partnerships, such as limited liability partnerships and partnerships limited by shares, include structures where none of the partners have unlimited liability for the partnership’s obligations or the actions of other partners. These partnerships are subject to CT in the same way as a corporate entity (see section ‘Juridical persons’).

In addition to the 0% Corporate Tax (CT) rate for taxable income up to AED 375,000, small businesses with revenue below a specified threshold can apply for "small business relief," allowing them to be considered as having no taxable income during the relevant Tax Period and potentially simplifying their compliance requirements. To qualify for small business relief, a formal election must be submitted to the FTA.

To qualify for the investment fund exemption, either the investment fund or its manager must be subject to regulatory oversight, but not necessarily both.

No, but individuals conducting business in the UAE through a sole proprietorship or civil company may be liable for Corporate Tax (CT) if they engage in a relevant business or business activity.

The terms "Business" and "Business Activity," as defined in the Corporate Tax Law, specify when the activities of certain individuals create a UAE Corporate Tax (CT) liability by designating the individual as a taxable person. "Business" refers to any economic activity, whether ongoing or temporary, undertaken by any individual. It is understood that such activities are conducted with the intent to generate profit and that there is some level of organization and structure involved. However, for UAE CT purposes, a business or business activity retains its identity even if it does not yield a profit. In the context of the Corporate Tax Law for companies and other juridical persons, all activities conducted and assets used or held will typically be regarded as activities and assets associated with a "Business." Individuals may earn income through wages, salaries, investments, or by engaging in commercial, industrial, or professional activities, either directly or as sole proprietors. For natural persons, a Cabinet Decision will be issued in the future to provide further details on the criteria that would bring them within the scope of UAE CT.

UAE Corporate Tax (CT) applies to juridical persons incorporated in the UAE and those effectively managed and controlled within the UAE, as well as to foreign juridical persons with a permanent establishment in the UAE (see the question ‘Who is considered resident for UAE CT purposes?’ under the section on Scope and Rate). Individuals will only be subject to CT if they are involved in a business or business activity in the UAE, either directly or through an unincorporated partnership or sole proprietorship. A Cabinet Decision will be issued in the future to provide further details on the criteria that would bring a natural person within the scope of UAE CT.

Companies incorporated in the UAE, such as LLCs, PSCs, PJSCs, and other juridical entities, will be classified as resident persons for Corporate Tax (CT) purposes. Any entity incorporated in the UAE will automatically be regarded as a 'resident' person under the UAE CT framework. Similarly, individuals engaged in a business or business activity in the UAE will also be classified as resident persons for these purposes. A foreign company may be considered a resident person for UAE CT purposes if it is effectively “managed and controlled” in the UAE. When determining where a company is effectively managed and controlled, all relevant facts and circumstances must be taken into account. A key indicator may be the location where strategic decisions that impact the business are made.

When the conditions of the Investment Manager Exemption are satisfied, a UAE-based investment manager should not establish potential UAE residency for Corporate Tax (CT) purposes for the foreign investment fund or investment vehicle it manages.

In the Corporate Tax Law, the term "Natural Person" refers to an individual.

Most countries worldwide, including the majority in the Middle East, have a comprehensive Corporate Tax (CT) regime.

An investment fund is an entity whose primary activity involves issuing investment interests to raise capital, pool investor funds, or create a joint investor fund. The goal is to allow the holders of these investment interests to benefit from the profits or gains derived from the entity’s acquisition, holding, management, or disposal of investments, in accordance with applicable legislation.

This page aims to offer guidance on the UAE Corporate Tax (CT) regime. You can access Federal Decree-Law No. 47 of 2022 regarding the Taxation of Corporations and Businesses (Corporate Tax Law) here. Please note that the information provided in these questions and answers should not be construed as legal or tax advice. It is not comprehensive, and it may not offer a definitive solution for every situation. These questions and answers do not cover all aspects of the UAE CT regime, and individual or business-specific circumstances should be taken into account when making decisions. The content may change without prior notice. Additional information and detailed guidance on the UAE CT regime will be provided in the future. 4o mini

Since Corporate Tax (CT) is assessed annually, it is important to define the "Tax Period." Typically, the Tax Period will align with the Gregorian calendar year (i.e., from January 1 to December 31), unless the business uses a different 12-month period for its financial statement preparation.

Existing international agreements, including those aimed at avoiding double taxation, to which the UAE is a party, should be taken into account under the UAE Corporate Tax regime. If there is a conflict between the Corporate Tax Law and an international agreement regarding the right to tax a specific item of income, the international agreement may take precedence and limit the application of UAE Corporate Tax.

A "juridical person" is an entity established or recognized under UAE laws and regulations, or the laws of a foreign jurisdiction, that possesses a legal personality distinct from its founders, owners, and directors. Examples of domestic juridical persons in the UAE include limited liability companies, foundations, 'onshore' trusts, public or private joint stock companies, and other entities with separate legal personality under applicable UAE mainland legislation or Free Zone regulations. Branches of domestic or foreign juridical persons in the UAE are considered extensions of their "parent" or "head office" and are therefore not regarded as separate juridical persons.

Yes, the UAE Corporate Tax (CT) is a federal tax, meaning it will be applicable throughout all the Emirates.

The taxable income for a Tax Period will be based on the accounting net profit (or loss) of the business, adjusted for specific items outlined in the Corporate Tax Law. The accounting net profit (or loss) is the figure reported in the financial statements, which are prepared in accordance with internationally recognized accounting standards. Adjustments to this net profit (or loss) must be made for the following items: Unrealized gains and losses (depending on the election regarding the application of the realization principle); Exempt income, such as qualifying dividends and capital gains; Income from intra-group transfers; Deductions that are not permitted for tax purposes; Transactions with Related Parties and Connected Persons; Transfers of tax losses within the group, where applicable; Incentives or tax reliefs; and Any other adjustments as determined by the Minister.

Self-employed individuals will be liable for UAE Corporate Tax (CT) only if their activity qualifies as a taxable business or business activity, as outlined in an upcoming Cabinet Decision. Even if a self-employed person is deemed to be engaged in a taxable business or activity, they will not owe CT on the first AED 375,000 of net income or profit generated from that activity. Additionally, further relief (small business relief) may be available to self-employed individuals and other entrepreneurs.

UAE and foreign individuals will not be liable for UAE Corporate Tax (CT) on dividends, capital gains, or other income earned from holding shares or other securities in their personal capacity.

This will need to be evaluated on a case-by-case basis, considering factors such as the location where key decision-makers, like directors, make the strategic decisions impacting the juridical person.

The Ministry of Finance will continue to serve as the 'competent authority' for bilateral and multilateral tax agreements, as well as for the international exchange of tax-related information. Additionally, the Ministry has the authority to provide further guidance and issue implementing regulations for UAE Corporate Tax and other federal taxes.

To evaluate the implications of the UAE Corporate Tax (CT) regime for your business, you should start by: Reviewing the Corporate Tax Law and the related information available on the websites of the Ministry of Finance and the Federal Tax Authority. Using this information to determine whether your business is subject to UAE CT and, if so, from what date. Understanding your business's obligations under the Corporate Tax Law, including a. Whether your business needs to register for UAE CT. b. The accounting or tax period applicable to your business. c. The deadline for filing a UAE CT return. d. Any elections or applications your business can or should make for UAE CT purposes. e. How UAE CT may affect your business’s obligations and liabilities under contracts with customers and suppliers. f. The financial information and records your business must maintain for UAE CT purposes. Regularly visiting the websites of the Ministry of Finance and the Federal Tax Authority for additional information and guidance on the UAE CT regime.

All activities conducted by a juridical person will be classified as "business activities" and fall within the scope of UAE Corporate Tax (CT), unless explicitly exempted.

Yes, applicable service fees will still need to be paid to the relevant Emirate and Federal Governments. Expenses related to business setup, license renewal, and other government fees incurred solely in the ordinary course of business are deductible for UAE Corporate Tax purposes.

Corporate Tax (CT) is a direct tax imposed on the net income or profit of corporations and other businesses. In some jurisdictions, it is also known as "Corporate Income Tax" or "Business Profits Tax."

For specific types of business activities, natural persons can establish a sole proprietorship or civil company. For Corporate Tax (CT) purposes, these entities will be regarded as the natural person or persons who own them.

The individual will submit a single Corporate Tax (CT) return that encompasses all their business activities subject to UAE CT.

The rental or sale of the residential portion of a building will be classified as zero-rated or exempt, depending on whether it is the first supply made within three years of the building's completion or a subsequent supply. In contrast, the rental or sale of the commercial portion of the building will be subject to VAT at a rate of 5%. Any tax that cannot be directly linked to exempt or taxable supplies must be apportioned, with only the portion related to taxable supplies (at 0% and 5%) eligible for recovery.

Businesses must meticulously document their income, expenses, and related VAT charges. Registered businesses and traders collect VAT from all their customers at the applicable rate and incur VAT on the goods and services purchased from suppliers. The difference between these amounts is either reclaimed or paid to the government.

A sales tax is a type of consumption tax, similar to VAT. While the general public may not notice a significant difference in how these taxes function, there are important distinctions. In many countries, sales taxes apply only to transactions involving goods and are charged only on the final sale to the consumer. In contrast, VAT is levied on both goods and services and is applied at each stage of the supply chain, including the final sale. Additionally, VAT is also imposed on imported goods and services, ensuring a level playing field for domestic providers. Many countries prefer VAT over sales taxes for various reasons. Notably, VAT is seen as a more advanced taxation method because it requires businesses to act as tax collectors for the government, which helps reduce misreporting and tax evasion.

The initial supply of a newly constructed residential building within its first three years is zero-rated. All supplies made after that are exempt, even if they occur within the same three-year period.

An owner of a residential building cannot recover VAT on expenses associated with the exempt supply of that building. In contrast, an owner of a commercial building is typically able to recover VAT on expenses related to the supply of the commercial property.

A commercial building refers to any structure, or part of a structure, that is not used for residential purposes. Examples include offices, warehouses, hotels, shops, and similar establishments.

Value Added Tax (VAT) is an indirect tax that may also be referred to as a type of general consumption tax. In countries where VAT is implemented, it is applied to most goods and services that are bought and sold. VAT is one of the most prevalent forms of consumption tax globally, with over 150 countries adopting it or a similar system known as Goods and Services Tax (GST). This includes all 29 members of the European Union, as well as Canada, New Zealand, Australia, Singapore, and Malaysia. The tax is applied at each stage of the supply chain. While businesses are responsible for collecting and reporting the VAT, the ultimate cost is typically borne by consumers. Businesses remit the VAT collected from customers to the government but may also claim refunds for the VAT they’ve paid to their suppliers. This system ensures that government tax receipts reflect the value added at each step of the supply chain.

Yes, businesses with supplies or imports between AED 187,500 and AED 375,000 may register voluntarily.

The UAE is part of a group of countries linked by "The Economic Agreement Between the GCC States" and "The GCC Customs Union." Historically, the GCC nations have collaborated on developing and implementing new public policies, as this cooperative approach is beneficial for the region.

Log into the FTA e-Services portal through E-SERVICES, navigate to the VAT section, and click on EDIT to enter your Customs Registration Number. This will automatically update your records.

A residential building refers to any structure, or part of a structure, designed for occupancy by individuals, primarily serving as a main residence. It does not include: Any movable structure that is not permanently fixed to the ground and can be relocated without damage. Buildings used as hotels, motels, bed and breakfast establishments, or hospitals. Serviced apartments where additional services beyond accommodation are provided. Any building that has been constructed or converted without proper legal authorization.

Taxable supplies are goods and services subject to VAT at the standard 5% rate or zero-rated.

VAT aims to strengthen the country’s economic foundation. To this end, there are regulations that require businesses to clearly indicate the amount of VAT included in each transaction. This ensures consumers have the necessary information to make informed purchasing decisions.

The UAE Federal and Emirate governments offer a variety of public services to citizens and residents, such as hospitals, roads, public schools, parks, waste management, and police services. These services are funded through government budgets. The introduction of VAT will create a new source of revenue for the UAE, supporting the ongoing delivery of high-quality public services in the future. Additionally, it will assist the government in its goal of decreasing reliance on oil and other hydrocarbons for revenue.