UAE Corporate Tax 2023 deadline looms: Everything you need to know

UAE businesses will become subject to corporate tax from the beginning of their first fiscal year that begins on or after June 1, 2023 – here is everything you need to know as the deadline looms.

The UAE officially issued a federal decree-law on corporate tax at a 9 percent rate for taxable business profits exceeding AED375,000 at the end of last year.

Under Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses, the payment and compliance deadline will give taxpayers a time period of up to 21 months from the beginning of their financial year to prepare for filing and making their tax payments.

For instance, businesses with a financial year starting on June 1, 2023 and ending on May 31, 2024 will have from June 1, 2024 until February 28, 2025 (21 months) to file their corporate tax returns and make their payments.

For businesses that have their first tax periods start on January 1, 2024 and end December 21, 2024, the tax returns and payments would need to be made between January 1 and September 30, 2025.

Corporate taxable companies and persons

UAE companies and other juridical persons that are incorporated or effectively managed and controlled in the UAE;
Natural persons (individuals) who conduct a Business or Business Activity in the UAE as specified in a Cabinet Decision to be issued in due course; and
Non-resident juridical persons (foreign legal entities) that have a Permanent Establishment in the UAE (which is explained under [Section 8]).
Juridical persons established in a UAE Free Zone are also within the scope of Corporate Tax as “Taxable Persons” and will need to comply with the requirements set out in the Corporate Tax Law. However, a Free Zone Person that meets the conditions to be considered a Qualifying Free Zone Person can benefit from a Corporate Tax rate of 0 percent on their Qualifying Income.
Non-resident persons that do not have a Permanent Establishment in the UAE or that earn UAE sourced income that is not related to their Permanent Establishment may be subject to Withholding Tax (at the rate of 0 percent).

Corporate tax exemptions

Government entities.
Government controlled entities.
Person engaged in an extractive business.
Person engaged in a non-extractive natural resource business.
Qualifying public benefit entity.
Qualifying investment fund.
Public pension or social security fund that is subject to regulatory oversight of the competent state authority.
Private pension or social security fund that is subject to regulatory oversight of the competent state authority.
A juridical person incorporated in the State that is wholly owned and controlled by
an Exempt Person that conducts any of the following:
Undertakes part or whole of the activity of the Exempt Person.
Is engaged exclusively in holding assets or investing funds for the benefit of
the Exempt Person.
Only carries out activities that are ancillary to those carried out by the Exempt Person.
Any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister.