Introduced in January 2023 and effective as of June 2023, the new 9% corporate tax rate has been met with mixed reactions from businesses operating in the UAE. Some companies have welcomed the move as a step towards greater economic stability and sustainability, while others have expressed concern about the potential impact on their bottom line. Overall, the new corporate tax is expected to affect the UAE’s business landscape significantly and will require companies to review their operations and financial planning carefully.
As UAE-based businesses await further clarifying Cabinet regulations, a more nuanced picture of the country’s corporate tax regime is emerging - one that makes it clear that most companies will need expert guidance to ensure compliance. What is clear from Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, which provides the foundation for the UAE’s corporate tax regime, is that the country is committed to following international best practices. For example, businesses operating in several strategic sectors can take advantage of certain exemptions, and free zone entities can maintain their 0% tax position (subject to certain conditions).
However, it could prove challenging for businesses to navigate critical questions, such as whether an entity is a ‘taxable person’ or what is ‘taxable income’. To complicate the matter further, there are provisions which allow for the taxation of non-resident taxable persons, and the UAE’s corporate tax rate applies to worldwide taxable income - not just to income generated in the country. Additionally, exemptions for foreign branch profits, dividend income, capital gains, and the applicability of foreign tax credits demonstrate that companies preparing for the UAE’s corporate tax will need expert support to ensure
compliance and minimise tax liability.
PRO Partner Group can offer a guiding light for many businesses that need guidance on complying with the UAE’s new corporate tax law. With a team of tax and accountancy experts experienced in working with emerging tax regimes, PRO Partner Group can help companies in the UAE ensure they stay on track and are fully compliant.
Whilst UAE companies prepare for the new corporate tax regulations, Nazar Musar, CEO of PRO Partner Group, noted, “We understand that the new corporate tax laws in the UAE can be a challenge for businesses, which is why we are proud to offer expert guidance and support. Our team has been at the forefront of this developing regulation, carefully monitoring the issued law and the UAE Ministry of Finance’s guidance. We are ready to support companies with preparation, planning and compliance. Ultimately, we are here to help businesses succeed under the new tax regime.”
In addition to providing expert guidance on the new corporate tax laws, PRO Partner Group offers a range of consulting services to help businesses, including strategic planning, market analysis and corporate structuring advice.
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