The UAE has published a new ministerial directive detailing the rules for tax obligations in the nation. According to the new regulations, which went into effect on May 17, 2023, UAE business owners would only be liable to pay corporate tax if their yearly revenue reached 1 million AED ($272,000). Real estate and personal investment income will also not be regarded as taxable income.
Corporation tax rules in the UAE
UAE Cabinet Decision No. 49 of 2023 was released by the Ministry of Finance to clarify how the corporate tax would be applied to people who were conducting business.
The legislation makes sure that only earnings related to businesses are taxed, while earnings from employment, investments, and real estate (without the need for a licence) for individuals continue to be excluded from corporate tax.
If an individual's annual aggregate revenue exceeds AED 1 million, they only need to register and pay corporate tax. For instance, the income of a resident of the UAE who runs an internet business with a yearly revenue of more than AED1 million would be subject to corporate tax. Although they fall under the out-of-scope categories, rental income and personal investment income are not subject to corporate tax,The decision will be viewed as a boost for startups and small enterprises.
In addition,Younis Haji Al Khouri, undersecretary of the ministry of finance, stated: "The new Cabinet Decision underscores the UAE's commitment to maintaining a clear and competitive tax system for both local and foreign individual investors.
By reforming the corporate tax system, the UAE continues to foster an inviting business environment that supports the growth of small businesses, startups, and the overall economy.
