Tax presence
United Arab Emirates
LLC
The UAE has long been known as a zero-corporate-tax jurisdiction. This is set to change with the Ministry of Finance’s (MOF) announcement on January 31, 2022 that the UAE will introduce a federal corporate income tax (CIT) effective for financial years starting on or after June 1, 2023. Because the UAE is an Inclusive Framework member of the Organisation for Economic Cooperation and Development’s (OECD) anti-Base Erosion and Profit Shifting initiatives, it has been expected that it would introduce legislation to implement the multinational-focused Global Minimum Corporate Tax (GMCT) of 15 percent. With MOF’s recent announcement, more details have been revealed on the contours of the UAE’s CIT regime.
While the formal CIT legislation has not yet been published, MOF’s announcement states that CIT will be payable on the profits of UAE businesses as reported in their financial statements prepared in accordance with internationally acceptable accounting standards. CIT will apply to all businesses and commercial activities alike, except for the extraction of natural resources, which will remain subject to Emirate-level corporate taxation.
The standard statutory CIT rate will be 9 percent, whereas a 0-percent rate will apply for taxable profits up to AED375,000 to support small businesses and startups. Multinationals earning more than EUR750 million in global revenues will be subject to a 15-percent CIT rate, which constitutes the UAE’s implementation of the GMCT.
No personal income tax or corporate taxes payable, save for companies engaged in oil, gas, hospitality and petrochemical activities, among others. There are some municipality taxes on rent and certain land transfer charges paid when transferring real estate. Effective January 1, 2018, the UAE has implemented a value-added tax (VAT) at a rate of 5 percent, as recommended by the World Bank and the International Monetary Fund.
Branch
Same as LLC.
FZ-LLC
No personal income tax or corporate taxes payable. The UAE contains many free zones in the UAE, where international groups have been exempt from payment of VAT, but, in all other non-designated free zones, VAT is applicable to establish 100-percent owned subsidiaries. Most free zones provide tax incentives to companies and branches established therein, which are typically valid for a number of years. According to the MOF, free zone businesses will be subject to the new CIT; however, the CIT regime will continue to honor the tax incentives offered to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE (ie, with parties outside of the Free Zone). The designated free zones which are exempt from VAT are set out below:
Abu Dhabi
- Abu Dhabi Global Market
- Twofour54
- Masdar City Free Zone
- Free Trade Zone of Khalifa Port
- Abu Dhabi Airport Free Zone
- Khalifa Industrial Zone
Dubai
- Dubai International Financial Centre
- Dubai Development Authority
- Dubai Multi Commodities Centre
- Dubai Healthcare City
- Dubai Silicon Oasis
- Dubai World Trade Centre
- Jebel Ali Free Zone (North-South)
- Dubai Cars and Automotive Zone (DUCAMZ)
- Dubai Textile City
- Free Zone Area in Al Quoz
- Free Zone Area in Al Qusais
- Dubai Aviation City
- Dubai Airport Free Zone
Sharjah
- Hamriyah Free Zone
- Sharjah Airport International Free Zone
Ajman
- Ajman Free Zone
Umm Al Quwain
- Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
- Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road
Ras Al Khaimah
- RAK Economic Zone (RAKEZ)
- RAK Maritime City Free Zone
- RAK Airport Free Zone
Fujairah
- Fujairah Free Zone
- Fujairah Oil Industry Zone (FOIZ)
FZ-Branch
Same as FZ-LLC.
Dual Licence Branch
Same as Branch.