FAQs About Corporate Tax In UAE
Frequently asked questions - FAQs
More details will come out when the legislation is finalized in the months to come.
There might be other exemptions that the Ministry will announce at the time of final legislation.
Following incomes are not subject to the corporate tax rate:
• Salaries of individuals
• Other employment income of individuals
• Personal investment in real estate
• Capital gains, dividends, interest income from saving schemes or bank deposits, and income due to shareholding of individuals in a personal capacity
• Qualifying intra-group transactions and reorganizations that satisfy the necessary conditions
• Capital gains and dividends earned from qualifying shareholding by UAE businesses
• Foreign individuals and entities with no trade or business operations in UAE in a regular manner
• Income from capital gains, royalties, dividends, interests, and other investment returns of foreign investors
• Free zone businesses not conducting any business in mainland UAE and complying with all regulatory requirements
Accordingly, a business can use the losses carried forward from the year after the effective date of the new corporate tax rate to offset the taxable income in the financial years after that year. Similar provisions apply in the case of offsetting the taxable income of one group company with the losses from another group company.
The key reasons behind introducing corporate tax rate include:
- To align with the global objective of requiring large multinationals to pay a minimum tax amount at the declared rate
- To address all the problems, challenges, and disputes arising because of the economic digitalization across the world through adopting OECD BEPS 2.0 measures
- To improve the country’s competitiveness in the global market by introducing a competitive corporate tax rate