The UAE Ministry of Finance has launched a public consultation on the introduction of a federal corporate tax regime. As previously reported, the UAE is planning to introduce the corporate tax regime for financial years beginning on or after 1 June 2023, including a standard statutory rate of 9%, with a 0% rate for taxable profits up to AED 375,000 to support small businesses and startups (applies progressively).
The public consultation document covers the key aspects of the regime, including taxable persons, basis of taxation, calculation of taxable income, group treatment, transfer pricing, calculation of the tax liability, and administration. The document also addresses international developments, including that the introduction of a corporate tax regime in the UAE will provide a basis for the UAE to execute its support of the global minimum effective tax rate as proposed under Pillar Two, and more broadly its commitment to enhancing tax transparency and preventing harmful tax practices.
The deadline for comments is 19 May 2022.
UAE CORPORATE TAX
On 31 January 2022, the Ministry of Finance announced that the United Arab Emirates (UAE) will introduce a federal Corporate Tax on Business profits effective for Financial Years starting on or after 1 June 2023. The introduction of a federal Corporate Tax regime is intended to help the UAE achieve its strategic objectives and accelerate its development and transformation. The certainty of a competitive regime, together with the UAE's extensive network of double tax treaties, will cement the UAE's position as a leading hub for business and investment.
Since the announcement in January 2022, work has continued on the design and implementation of the UAE Corporate Tax regime to ensure that it incorporates best practices globally and minimizes the compliance burden for UAE Businesses. Recognizing the importance of consultation with the business community and other interested stakeholders, the Ministry of Finance is launching this initiative ahead of the official release of the relevant legislation. Input received will be carefully considered and will assist the Ministry of Finance in further refining and implementing the proposed UAE Corporate Tax regulations.
The Ministry of Finance welcomes comments on this consultation document by 19 May 2022 using the online submission form, which can be found by clicking on the participation link below. The Ministry of Finance would appreciate clear and concise comments, focusing on aspects of the proposed Corporate Tax regime that may help to reduce compliance cost and complexity, and improve certainty for both the tax administration and taxpayers alike. Comments on areas that are otherwise not covered in this document are also welcomed. Where possible, interested parties are encouraged to explain comments with examples, data or other information to support views on the design and implementation of the UAE Corporate Tax regime. The Ministry of Finance regrets that comments received after 19 May 2022 or that are submitted in any manner other than by using the prescribed online submission form will not be considered.
The public consultation document contains information on the proposed UAE Corporate Tax regime, and is released for the purposes of obtaining input from stakeholders. The document does not reflect the final view of the UAE Government, and is not intended to comprehensively address all possible aspects of the proposed UAE Corporate Tax regime. The public consultation document is released in advance of relevant legislation being finalised and promulgated, and is released on the basis that it is without prejudice to the final UAE Corporate Tax regime. As such, the consultation document should not be used or relied upon to make individual or commercial decisions as it does not represent the final legislation. Further information on the technical details and other specifics of the UAE Corporate Tax regime will be made available in due course.