What is the corporate income tax in the UAE?

United Arab Emirates does not apply corporate income tax, however, from June 2023, a 9% corporate income tax rate will be introduced and will become applicable for mainland companies. Other types of companies, such as free zone companies, will remain unaffected.

Having a standard corporate income tax rate of 9% will make UAE more trustworthy for the OECD countries and jurisdictions with which the UAE has signed double taxation avoidance treaties, while the new corporate income tax regime will still allow the businesses to be structured in a way in which, factually, the company will be able to pay a very limited amount of taxes or none at all. For example, even though a mainland company will have to pay corporate income tax of 9%, the ultimate beneficial owners, if they are UAE tax residents, will be able to receive funds in the form of salary (rather than dividends) and not be taxed for it – salary is considered to be allowable deductions (expenses) for a company and is not regarded as taxable income for an UAE tax resident.

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