Subjecting income exceeding 375 thousand dirhams to a tax rate of 9%

"Finance" confirms the amount of annual income subject to corporate and business tax

 Younis Haji Al Khoury: "The corporate and business tax system in the UAE provides taxpayers with certainty and confidence."

The Ministry of Finance announced the details of Cabinet Resolution No. 116 of 2022 regarding determining the amount of annual income subject to corporate and business tax in the UAE.

And the "Finance" stated that the decision comes in the wake of the issuance of a federal decree-law regarding corporate and business tax last month, and in confirmation of what the Ministry previously announced about the amount of annual income subject to corporate and business tax in the UAE, as corporate and business tax in the country will apply to "business". For fiscal years beginning on or after June 1, 2023.

Determine the ratio

She explained that the “corporate and business tax” was set at 9% on taxable income that exceeds the amount of 375 thousand dirhams, pointing out that this percentage ensures that the corporate and business tax system in the UAE is among the most competitive systems in the world, which contributes to strengthening the position The UAE is a global financial and business center.

According to the decision, the part of the taxable income that does not exceed the amount of 375 thousand dirhams is subject to corporate and business tax at a rate of (0%) in the tax period, regardless of whether the taxable person carries on several businesses or business activity during that period.

Taxable income that exceeds the amount of 375 thousand dirhams is also subject to corporate and business tax (9%) in the relevant tax period.

"support" and "competitive"

The Undersecretary of the Ministry of Finance, Younis Haji Al-Khoury, said: “The Cabinet’s decision regarding determining the amount of annual income subject to corporate and business tax comes as confirmation of the tax rates that were announced previously, as the tax rate and the amount of annual income subject to corporate and business tax in the country were carefully and carefully determined. It reflects the competitiveness of the corporate and business tax system in the UAE.

He added: «Determining the percentage (0%) on corporate profits that do not exceed 375 thousand dirhams confirms the continuous support for emerging and small companies, in appreciation of their vital contribution to the economic growth of the UAE, and in addition to that, setting a rate of 9% on taxable income that exceeds That amount is considered a competitive advantage compared to other tax systems. The corporate and business tax system in the UAE provides taxpayers with certainty and confidence, which enhances the role of the UAE tax system in supporting the business and investment sector.

"Business" and "Business Activities"

The Cabinet’s decision defined “business” as an activity that is practiced regularly, continuity and independently by any person and anywhere, such as industrial, commercial, agricultural, handicraft, professional, service, excavation activities, or any other activity. Relates to the use of tangible or immaterial property.

He also defined “business activities” as any transaction, activity, or series of transactions that a natural or legal person engages in in the course of his business.

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