9% corporate tax to be introduced on business profits in the UAE
Individuals earning income from employment, equity investments, and real estate
Individual’s personal income earned from a source unrelated to UAE business or trade
Foreign investors with no business in UAE
Domestic and cross-border payments are free from withholding tax
Capital gains and dividends received by a UAE company from its qualifying shareholdings
Qualifying intragroup transactions and restructurings
Free zone businesses in full compliance with relevant free zone requirements and no business in mainland UAE
With this decision, the country will no longer remain a tax-free hub for businesses, except in the free zones. The new regime does not plan to put the burden of taxes on small businesses and startups. It is a competitive rate based on best practices from across the globe with little to no taxation compliance burden.
The decision aims to commit to the initiatives of improvement in tax transparency and elimination of damaging tax practices. The new corporate tax regime displays the country’s support for the global minimum tax rate rule. Also, the country can fight the challenges resulting from BEPS and economic digitalization.
The new tax will be a source of revenue for the government. At the federal level, the country will have a new source of income to support the economy. The corporate sector will have to wait for more details, but they have more than a year to prepare for the new tax regime.