The UAE plans to keep the rate of corporate tax announced last year unchanged for the foreseeable future as companies in the Arab world’s second-largest economy prepare to enter the new tax regime, the undersecretary of the Ministry of Finance has said.
“The rate is agreed and fixed at 9 per cent … as long as the [corporate tax] law is there,” Younis Al Khouri told The National on Monday in Abu Dhabi. “If there is any review, we will announce it later but as of today, no change in the rate.”
Last January, the UAE introduced the federal corporate tax with a standard statutory rate of 9 per cent, which will go into effect for businesses whose financial year starts on or after June 1 this year.
In December, the country issued the federal corporate tax law, bringing the income of companies exceeding Dh375,000 ($102,000) in the corporate tax bracket.
Taxable profits below that threshold will be subject to a zero per cent rate. No corporate tax will apply on salaries or other personal income from employment — be it in the government, semi-governmental, or private sector, the Ministry of Finance said at the time.
The Federal Decree-Law No (47) of 2022 on the Taxation of Corporations and Businesses provides the legislative basis for the introduction of the federal corporate tax.
Mr Al Khouri said the Federal Tax Authority will provide further clarity about procedures and mechanisms applicable to the corporate sector.
The UAE's corporate tax regime is based on a self-assessment principle, which means businesses are required to ensure that the documents submitted to the Federal Tax Authority are correct and comply with the law.
The new tax regime allows a generous compliance period, for example, businesses with a financial year starting on June 1, 2023, and ending on May 31, 2024, will have until February 28, 2025, to file their tax returns and make payments.
Where a company's first tax period starts on January 1, 2024, and ends on December 31, 2024, the return and payment would need to be made before September 1, 2025, the ministry said in a December 14 statement.
The new corporate tax will have a positive impact on the UAE’s revenue base. However, the government is still awaiting to assess the “effect and impact” of the new tax, Mr Al Khouri said.
The Ministry of Finance, which generated Dh9 billion in VAT proceeds last year, reduced fees and charges for businesses and people when VAT and excise tax programmes were introduced, offsetting revenue generated from those schemes, he said.
The introduction of corporate tax is aimed at modernising the economy, Mr Al Khouri said.
“Since 50 years, the UAE [tax system] was more based on the fees and the charges and usually the fees and the charges you pay upfront, while the corporate income tax you pay after,” he said.
Corporate income tax is “more beneficial” as it is “simpler and easier” for the business community, he added.
The ministry has drafted the corporate tax law in accordance with international best practices to support the UAE’s strategic goals, promote tax transparency and prevent harmful tax practices, given the UAE’s role as an active member of the Organisation for Economic Co-operation and Development's (OECD) Inclusive Framework on Domestic Tax Base Erosion and Profit Shifting, he earlier told a gathering of company executives, tax experts legal advisers and businessmen.
The ministry is running a Corporate Tax Public Awareness Programme, along with the Federal Tax Authority to prepare companies, businesses and tax experts for the new tax regime in the country.
The headline tax rate of 9 per cent positions the UAE competitively when compared with other financial centres and developed economies globally.
The average top corporate tax rate for 2022 among EU countries was 21.16 per cent, 23.57 per cent among OECD countries and 32 per cent in the G7, the Tax Foundation in Washington said.
The UAE corporate tax law exempts certain entities, including those involved in natural resource extraction activities in the country.
However, they remain subject to existing local emirate-level tax, the ministry said last month.
Other exemptions are available to organisations such as government entities, pension or investment funds and public benefit organisations.
Existing free-zone entities are also exempt from corporate tax as they are among the drivers of the UAE's economic growth, the ministry said at the time.
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THE DETAILS
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EMERGENCY PHONE NUMBERS
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
A cryptocurrency primer for beginners
Cryptocurrency Investing for Dummies – by Kiana Danial
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Although cryptocurrencies are a fast evolving world, this book offers a good insight into the game as well as providing some basic tips, strategies and warning signs.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
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5. Greater emphasis on statutory audit
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6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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- Appeasing Hitler: Chamberlain, Churchill and the Road to War by Tim Bouverie
- Some Kids I Taught and What They Taught Me by Kate Clanchy
- Invisible Women: Exposing Data Bias in a World Designed for Men by Caroline Criado Perez
- Follow Me, Akhi: The Online World of British Muslims by Hussein Kesvani
- Guest House for Young Widows: Among the Women of ISIS by Azadeh Moaveni
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The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
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Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
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