A list of Exemptions from UAE Corporate Tax 2023 and How to Claim Them
This is the only list you will need to check the list of exemptions from UAE corporate tax 2023 as we will keep it updating based on recent announcements.
The United Arab Emirates (UAE) introduced its first-ever tax on business profits, with a 9% tax rate on companies and freelancers earning more than AED 375,000 ($102,000) annually, effective from June 2023. The move was aimed at reducing dependence on energy revenue and increasing financial transparency.
However, certain businesses and income segments will be exempted from the UAE corporate tax. In this article, we’ll explore these exemptions and how to claim them, providing a comprehensive guide to help businesses navigate the new tax landscape in the UAE.
Overview of UAE Corporate Tax Exemptions Announced So Far
The UAE Ministry of Finance has issued Ministerial Decision No. 43 of 2023, outlining the exemptions from tax registration under the Corporate Tax Law.
These exemptions include government entities, government-controlled entities, extractive and non-extractive natural resource businesses, and non-resident persons earning only UAE-sourced income without a permanent establishment in the UAE.
This decision aligns with international best practices and ensures that entities meeting the exemption conditions do not need to register with the Federal Tax Authority.
Income Below AED 375,000
Businesses earning less than AED 375,000 annually will not be subject to UAE corporate tax. This effectively means a 0% tax rate for those with an income below the threshold. This exemption aims to encourage small businesses and start-ups to continue their operations without the burden of additional taxes, fostering economic growth and entrepreneurship.
Individual Earnings in Personal Capacity
The UAE corporate tax law exempts specific individual earnings from taxation, providing relief for individuals who are not engaged in commercial activities. These exemptions include interests, profits, and other income from bank deposits or saving schemes, earnings from real estate investments, and dividends, capital gains, and other revenue from shares or securities. This policy ensures that individuals can continue to invest and save without facing additional tax liabilities.
Don’t get us wrong. Freelance Professionals are not really exempt. However, only those Freelance professionals with an annual net income below AED 375,000 will not be subject to UAE corporate tax. This is not an exemption; however, it is definitely a helping hand to encourage Freelancers to enter the UAE domain since not all Freeancers earn this much.
Businesses Engaged in Natural Resource Extraction
Firms involved in natural resource extraction, such as oil and gas, will remain exempt from corporate tax as they continue to be subject to Emirate-level corporate taxation. This provision ensures that the UAE’s vital natural resource sector remains competitive on a global scale and continues to attract investment. By maintaining the current tax regime for these businesses, the UAE can continue to leverage its rich natural resources to drive economic growth.
Entities exempted from the upcoming tax include public benefit entities, investment funds, and public pension and social security funds, provided they meet certain conditions. The UAE Cabinet may also grant additional exemptions based on the finance minister’s suggestions. These exemptions help support various sectors of the UAE economy, ensuring that public and private organizations can continue to contribute to the country’s development without facing increased tax burdens.
Claiming Tax Relief for Small Businesses
The UAE Ministry of Finance announced tax relief for small businesses with revenue below AED 3 million ($820,000) in the relevant period. This relief aims to support small businesses in the UAE amidst the new tax regime, reducing the financial burden on smaller enterprises and encouraging continued growth in this critical sector of the economy. To claim this relief, businesses must meet the necessary eligibility requirements and follow the prescribed application process as outlined by the Ministry of Finance.
UAE’s Attractive Corporate Tax Environment
Despite the introduction of corporate tax, the UAE’s tax rate of 9% remains one of the lowest globally. This low tax rate, combined with the various exemptions and reliefs available, ensures that the UAE continues to be an attractive destination for businesses looking to establish a presence in the Middle East. The new corporate tax regime demonstrates the UAE’s commitment to financial transparency and fiscal responsibility while maintaining its competitiveness in the global market.
Navigating Exemptions with Horizon Biz Consultancy Dubai
Understanding the exemptions from UAE Corporate Tax 2023 and how to claim them is essential for businesses operating in the UAE. Understanding the exemptions and the processes for claiming them, businesses can ensure compliance with the new tax laws and minimize their tax liabilities.
Horizon Biz Consultancy Dubai, a leading business consultancy in the UAE, can provide expert guidance and support for businesses navigating the UAE corporate tax landscape, ensuring that businesses can capitalize on available exemptions and reliefs while remaining compliant with the new tax regime.
Trust Horizon Biz Consultancy Dubai to be your partner in understanding and claiming exemptions from UAE Corporate Tax 2023, providing you with the expertise and support needed to thrive in the UAE’s evolving business environment.