It has been made clear that the regime of Corporate Tax in UAE will follow best global practices and is expected to be implemented with easy corporate tax compliance requirements. The corporate tax rate in UAE is among the most competitive in the world and the lowest in the GCC – where Bahrain has now become the only country without a CT regime.
Corporate Tax will be levied at a headline rate of 9% on Taxable Income exceeding AED 375,000/-. The total taxable income will not be taxable at 9% and taxable Income below this threshold will be subject to a 0% rate of Corporate Tax.
In case of the qualified Freezone Person the threshold limit of AED 375,000/- is not been given for taxable income earned by Qualified Freezone Person. All taxable income which does not fall into category of Qualified income shall be taxed at 9% rate of Corporate Tax.
Calculation of corporate tax can be understood from the following scenarios: -
Scenario 1.
Accounting income of a taxable person is AED 600,000/- out of which AED 100,000/- is consist of exempt income. Corporate Tax would be calculated as follows: -
|
Particulars |
Amount |
|
|
Accounting Income |
AED 600,000 |
|
|
Less: exempt income |
(AED 100,000) |
|
|
Taxable Profit |
AED 500,000 |
|
|
Income |
Tax Rate |
Calculation |
Tax Amount |
|
AED 0-375,000 |
0% |
375,000*0% |
0 |
|
AED 375,001-500,000 |
9% |
(500,000-375,000) =125,000*9% |
AED 11,250 |
|
Total Tax liability |
AED 11,250/- |
||
Scenario 2.
Accounting income of a Qualified person is AED 600,000/- out of which AED 200,000/- is consist of taxable income & rest is qualified income. Corporate Tax would be calculated as follows: -
|
Income |
Tax Rate |
Calculation |
Tax Amount |
|
AED 400,000 |
0% |
400,000*0% |
0 |
|
AED 200,000 |
9% |
200,000*9% |
AED 18,000 |
|
Total Tax liability |
AED 18,000/- |
||
