UAE announces key tax rule update for resident and non-resident
The United Arab Emirates Ministry of Finance has raised the tax threshold for businesses and activities related to businesses that are carried out by individuals - announces key tax rule update.
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The United Arab Emirates Ministry of Finance has revised the corporate tax laws that apply to persons, including residents and non-residents, who operate a firm or engage in economic activity. It is anticipated that the new step will facilitate the expansion of SMEs and new businesses in the Emirates.
UAE announces key tax rule update
An update from the Ministry of Finance stated that individuals who conduct business or commercial operations would only be subject to corporation tax and registration requirements if their combined turnover reaches 1 million UAE dirhams ($272,000) in a calendar year. This information was provided in response to a request for comment.
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In the United Arab Emirates (UAE), taxable profits of up to AED 375,000 are subject to a basic statutory rate of 9% of the corporation tax. This tax was first implemented in 2017. Profits earned by corporations will be subject to taxation beginning on or after June 1, 2023, for financial years beginning on or after that date.
According to the clarification provided by the Ministry of Finance, "for instance, in the event that an individual who is a UAE Resident operates an online business and the combined annual turnover from this business exceeds AED1 million, according to the new decision, the UAE Resident business income from the online business would be subject to Corporate Tax."
"However, if the UAE Resident also earns income from a rental property and personal investments, these sources of income would not be subject to Corporate Tax as they fall under the out-of-scope categories," it stated. "These sources of income would not be subject to Corporate Tax because they fall under the out-of-scope categories.