9% on taxable income that exceeds 375 thousand dirhams
"Finance" confirms the amount of annual income subject to corporate and business tax
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 Emirates, 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.
The taxable income that exceeds the amount of (375) thousand dirhams is also subject to corporate and business tax at the rate of (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 confirms the tax rates that were previously announced.
The tax rate and annual income subject to corporate and business tax in the country have been carefully determined in a way that reflects the competitiveness of the corporate and business tax system in the UAE.
He added: «Determining a zero percent rate (0%) on corporate profits that do not exceed 375 thousand dirhams confirms the continuous support for start-ups 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 Exceeding 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"
And 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, craft, professional, service, excavation activities, or any other activity. Another relates to the use of tangible or immaterial property.
The decision also defined “business activities” as any transaction, activity, series of transactions, or series of activities carried out by a natural or legal person in the course of its business.
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