Who will be subject to Corporate Tax in UAE?

According to the UAE Ministry of Finance (MOF), all business entities operating within UAE will be subject to the new tax regime from June 1, 2023, and onwards. The tax calculation of the period of businesses will differ based on how they report their financial year, as follows:

• Businesses that report financial years from July 1 will start tax calculation from July 1, 2023.
• Businesses that report financial years from January 1 will start tax calculation from January 1, 2024.

Apart from a few specific exceptions, all commercial activities that take place within UAE will have to register and file the corporate tax.

Tax Exemptions

The MOF has also announced a few exemptions for certain entities. If your business or institutional venture falls under one of those exemptions, you won’t have to file a tax report and pay the taxes. The exempt entities are:

• Any governmental or public entities that include both federal and regional offices, departments, divisions, and all other public institutions.
• Businesses that deal with the extraction or mining of natural resources in the UAE. As those businesses are already subject to Emirate-level taxation, they won’t have to file the corporate tax report separately.
• Any organisations that work for charitable and social causes. However, such businesses must register as social or charity organisations with the MOF. Those eligible must first apply to relevant authorities to obtain a formal clearance before applying for MOF registration.
• Any public or regulated private entities that deal with social benefit funds like pension or retirement planning.
• Real estate and other regulated investment funds. Similar to charitable organisations, such funds must apply to MOF and the Federal Tax Authority (FTA) to obtain a formal exemption approval.
• Any UAE companies fully owned by the UAE government and listed with a ministry-level decision to receive the tax exemption.