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UAE introduces new Corporate Tax Applicable to all Free Zones

On 1st June 2023, the United Arab Emirates (UAE) introduced a new Corporate Income Tax (CIT) policy which is applicable across all emirates and free zones in the country.

Companies operating in the UAE that generate taxable profiles surpassing AED 375,000 (equivalent to GBP 80,000) will be liable to pay a corporate tax rate of 9%. This tax rate is among the lowest in the region for corporate income taxes. The implementation of Corporate Income Tax aims to support the UAE in accomplishing its strategic goals and expediting its growth and progress. According to the UAE’s Ministry of Finance, companies operating in free zone can pay 0% tax on income from certain qualifying activities (example- manufacturing, reinsurance services and so on) and transactions. If a company meets the necessary requirements and is established, or registered within a free zone, it can benefit from a corporate tax rate of 0% on income that falls under category of ‘qualifying income’.

The introduction of a 9% corporate income tax in the UAE can be advantageous for UK businesses operating in the UAE. By establishing a competitive Corporate Tax system that aligns with international standards and leveraging its wide array of double tax treaties, the UAE solidifies its status as a prominent destination for business and investment. In order to avoid dual taxation and encourage trade between the UK and the UAE, both nations implemented a Double Taxation Treaty on 25th December 2016. This treaty ensures that UK companies operating in the UAE face lower tax obligations compared to operating in the countries like the UK, where the corporate income tax rate is higher at 25%. The objective of this treaty is to prevent businesses from being taxed twice on the same income.

How can we help?

The Greater Manchester Chamber of Commerce is organizing a Business Clinic about Doing Business in the Middle East on 14th July 2023 from 10:00 am to 16:00 pm at Elliot House, 151 Deansgate, Manchester, M3 3WD. This event in partnership with LD Export, our GMCC Approved Supplier, that helps European SMEs expand into the Gulf Cooperation Council (GCC)countries (Saudi Arabia, Qatar, United Arab Emirates, Bahrain, Kuwait, and Oman). You can book a one-to-one session for 25 minutes with our Middle East market expert. There are 10 slots available between 10:00am-4:00pm. Kindly book your slot while filling the registration form here. This event is free of charge for members and non-members however, registration is mandatory.

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