Page 5 - ICAI UAE TAX UPDATE_APRIL 2024

3. UPDATES

UAE Corporate Tax – Key Highlights

The Ministry of Finance of UAE (MoF) introduced Taxable Persons:
Corporate Tax Law by issuing a Federal Decree Law
Number 47 of 2022 “Taxation of Corporations and • Juridical Person incorporated in UAE (Resident &
Businesses”. Further, the MoF has also been issuing the Non-Resident)
other Cabinet and Ministerial Decisions which essentially • Foreign juridical Person which is effectively
form part of the Corporate Tax Law. The Federal Tax managed and controlled in UAE
Authority (FTA) has been issuing various guidance notes • Natural Person conducting business activity in
on various important aspects of the Corporate Tax Law. UAE
Following is the overview of certain key provisions of • Any other person decided by the cabinet
the Corporate Tax Law:

Corporate Tax Rates: Qualifying Free Zone Persons (QFZP):

• General Corporate Tax Rates: The QFZPs are taxable at 0% rate if all the following
o Taxable Income up to AED 375,000 – 0% conditions are satisfied:
o Taxable Income more than AED 375,000 – 9% o Maintain Adequate Substance
o Derive Qualifying Income
• Special Corporate Tax Rates for Qualifying Free o Not Elect to subject for CT under normal scheme
Zone Persons (QFZP): o Satisfied De minimis Requirement
o Qualifying Income – 0% o Maintain Audited Financial Statements
o Non- Qualifying Income– 9%
Small Business Relief:
Scope of Total Income:
• Small business relief is applicable only when
• Residents will be taxed on global income (Income the revenue of the Taxable Person for the relevant Tax
derived from UAE & outside UAE) and Non-residents will Period and previous Tax Periods does not exceed AED
be subject to CT on any taxable income attributable to 3,000,000 and after meeting other conditions mentioned
a Permanent Establishment (PE) or nexus in the UAE or in the Law.
any income that is considered UAE-sourced income. CT
does not apply to a natural person’s income from salary, Tax Group and Qualifying Group:
personal investment & personal real estate income
that is conducted or does not required to be conducted • For the formation of a tax group, all subsidiaries in
through a license. Free zone persons can continue to the UAE should be held by a resident holding entity with
maintain their 0% tax position subject to meeting certain at least a 95% stake either directly or indirectly through
conditions. one or more subsidiaries.

• For the formation of a qualifying group, either
taxable person should have a direct or indirect ownership
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