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UAE Corporate Tax – Income exempt, foreign person, free zones info

UAE Ministry of Finance has announced the introduction of corporate tax on business profits which will be effective from financial year starting from June 1, 2023. Here are the details being published in a series of articles.

You can read the Corporate Tax overview here: Overview

You can read the Corporate Tax Scope & Rate here: Scope & Rate

 

Income exempt from CT

Q) Will any income be exempt from UAE CT?

Dividends and capital gains earned by a UAE business from its qualifying shareholdings will be exempt from UAE CT.

 

Q) What is a ‘qualifying’ shareholding?

A qualifying shareholding refers to an ownership interest in a UAE or foreign company that meets certain conditions to be specified in the UAE CT law.

 

Q) Will intra-group transactions be exempt from UAE CT?

Qualifying intra-group transactions and reorganizations will not be subject to UAE CT provided the necessary conditions are met.

 

Foreign persons

Q) Will a foreign company or individual be subject to UAE CT?

Foreign entities and individuals will be subject to UAE CT only if they conduct a trade or business in the UAE in an ongoing or regular manner.

 

Q) Will income earned by a foreign investor be subject to UAE CT?

UAE CT will generally not be levied on a foreign investor’s income from dividends, capital gains, interest, royalties and other investment returns.

 

Free zones

Q) Will a free zone business be subject to UAE CT?

Free zone businesses will be subject to UAE CT, but the UAE CT regime will continue to honour the CT incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE.

 

Q) Will a free zone business be required to register and file a CT return?

A business established in a free zone will be required to register and file a CT return. Further details on the compliance obligations of free zone businesses will be provided in due course.

 

Q) Will the UAE CT treatment be different for a free zone business established in a financial free zone?

The UAE CT treatment that will apply to businesses in free zones will be the same across all free zones

 

IMP NOTE: The information in this page is meant to provide an initial introduction to the proposed UAE Corporate Tax (CT) regime in advance of relevant legislation being finalised and promulgated. It is not intended to comprehensively address all possible aspects of the UAE CT regime or to provide definitive answers, and should not be used for individual or business decisions as it does not represent the final legislation. This document is subject to change without notice.

Further information on the technical details and other specifics of the UAE CT regime will be made available in due course.

 

Reach out to Spectrum Auditing for further details. Call us today for any kind of assistance at +971 4 2699329 or email [email protected] to get all your queries addressed. Spectrum is your partner in your success.

 

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