UAE corporate tax laws explained

UAE tax laws have gone through multiple changes since 2017.

Here’s a quick summary of the main taxes businesses need to pay in the UAE.

UAE, among other things, is most known for its attractive tax policies. While as an individual you are not required to pay any taxes, businesses—depending on their industry—are needed to pay & file for tax returns.

Basic Tax Legislations

Under the UAE laws, there are three main kinds of business taxes:

  • Corporate Tax
  • Excise Duty
  • VAT

UAE Corporate Tax

Announced earlier this year, UAE businesses will need to file for corporate tax under certain circumstances from July 2023. Corporate tax is direct tax on net income or profit of a company.

  • Any business or individual operating under a commercial license
  • Banking, real estate, construction, agency & brokerage businesses
  • Oil & Gas will continue to operate under the current Emirate-level taxation
  • Individuals will be exempt from this tax for their salary, interest income, or real estate investments
  • The tax rate will vary from 0–9% depending on the income slab.

Excise Duties

Excise duties are levied on any product harmful to human health or the environment. The tax is ultimately paid by the consumer in way of a higher price point.

The products include carbonate drinks, sweetened drinks, energy drinks, tobacco products, electronic smoking devices, and their liquids.

Any business importing, storing or producing these products will need to register & pay the excise duty to the government.

You can register for excise duty on the FTA website.

Value Added Tax

VAT is levied on almost all goods & services. One of the purposes of VAT was to have a new income stream for the government to allow them to provide better public services for all. The rate of VAT is 5% and is collected by the businesses at the point of sale on behalf of the government. Any tax-registered business operating in the mainland and certain free zones is supposed to file for the VAT return at the end of each financial year.

You can file the return on FTA’s website online. Please keep in mind you must have all tax-related requirements and documents before you do so. Get in touch with our tax consultants today to help you with the registration and filing of tax returns.