The Ministry of Finance has announced that the UAE will introduce a federal corporate tax on business profits that will be effective for financial years starting on or after 1st June 2023.

This, of course, is quite shocking news for a jurisdiction where corporate tax was unknown so far, but is all bad news?

Indeed, the introduction of new taxation is never a moment to celebrate, but let’s look at the other statements announced by the Ministry of finance in the same press release. It might not all be bad news.

Rate
The corporate tax rate will be 9%, with an exemption on taxable income up to AED 375.000 (USD 102.110). Of course, zero percent would be better, but this will still be the lowest corporate rate in non-offshore jurisdictions.

When
The corporate will be effective for financial years starting on or after 1st June 2023. For all companies with a financial year corresponding to the calendar year, corporate tax will be applicable on profit from 1st January 2024 onward. This will give enough time for restructuring if eventually helpful.

source : https://www.fidinam.com/