The Ministry of Finance in the UAE has announced its new Corporate Tax structure which will come into effect starting June 2023, what impact will this have on businesses within the region.
The UAE is currently aligning with international policies and guidelines and changing policies which will help keeps its economy in a profitable bracket going forward, the 9% corporate tax which will be levied upon businesses starting June 2023 will be levied on businesses who show profits above 375,000 AED, no individuals, real estate, investments or salaried employees will have to bear the brunt of this new slab.
This tax has been brought in a few weeks after the government in the UAE changed the working week and is aligning to position the UAE as a global economic hub in terms of business and investment.
The new UAE levy will not include free zones companies and they will continue with the current corporate tax incentives if they do not conduct business with the mainland.
The UAE corporate tax regime will ensure the compliance burden is kept to a minimum for businesses that prepare and maintain adequate financial statements. Businesses will only need to file one corporate tax return each financial year and will not be required to make advance tax payments or prepare provisional tax returns. Transfer pricing and documentation requirements will apply to UAE businesses with reference to the OECD Transfer Pricing Guidelines.
This new structure will be dampening for businesses initially but I feel, once we look at the larger picture, this tax will help keep funds in check for the economic and overall holistic development plans of the UAE.
*Article by Mr. Rizwan Sajan, Chairman and Founder Danube Group
