• Home
• /
• Business

Corporate tax set to modernise UAE's economic ecosystem

Ministry of Finance holds second session of corporate tax public awareness programme in Dubai

The corporate tax will play a pivotal role in modernising the UAE’s economic ecosystem, supporting the UAE’s strategic objectives, ensuring tax transparency, and preventing harmful tax practices, experts say.

Addressing the second session of its corporate tax public awareness programme organised by the Ministry of Finance in Dubai, top government officials and private sector executives said the UAE corporate tax regime, with only nine per cent levy from June 1,2023, will be amongst the most competitive in the world.

They further said individuals will still not be subject to tax on their incomes from employment, real estate, equity investments or other personal income unrelated to a UAE trade or business. The tax also won’t be applied to foreign investors who don’t conduct business in the country.

Younis Haji Al Khouri, Undersecretary of the Ministry of Finance, who delivered the keynote address, said the Ministry of Finance designed the corporate tax law based on international best practices to expand its role in strengthening the UAE’s economic ecosystem.

“The law helps accomplish the UAE’s strategic objectives and provides additional revenue streams for the federal government to implement ambitious projects and maintain sustainable economic growth,” he said.

Khalid Ali Al Bustani, director-general of the FTA; Mohammad Ali Rashed Lootah, president and CEO of Dubai Chambers; leading officials and representatives from various business sectors along with more than 600 tax experts and business owners also attended the event.

Broadening revenue base

The corporate tax on business profits above Dh375,000 ($102,110) will help diversify government revenue away from the oil sector and broaden the government’s revenue base. It will further align the UAE with international efforts to combat tax avoidance, as the tax will be applied to all business and commercial activities except the hydrocarbon sector, which will remain subject to emirate level taxation.

“Today is an opportunity to explore the key features of the corporate tax regime and to provide business sectors with pertinent information and a thorough explanation of the aspects of the law,” Al Khouri said.

He said the aim is to support correct and accurate understanding and ensure seamless implementation and compliance with the new regime.

“This, in turn, helps support Dubai’s growing business community and facilitate more growth and prosperity in the private sector, as the emirate moves forward with implementing its ambitious strategic plans and building a world-class model to support the business community and achieve sustainable economic growth,” he said.

Empowering private sector

Khalid Ali Al Bustani said the launch of corporate tax in the UAE marks a new phase in empowering the private sector and the national economy, which serves to advance the country’s position as a global business and financial hub.

“The UAE's corporate tax regime keeps pace with tax systems implemented in other jurisdictions and countries that have established cooperation ties with the UAE, collaborating on ambitious commercial projects and investments. This facilitates the flow of capital and investment in Dubai and the UAE, on one hand, and in countries all around the world, on the other,” he said.

“We are confident that the business community in Dubai and across the country will show full compliance, and we commit to supporting them all the way to ensure the success of the entire tax ecosystem,” he said.

Tax experts and participants at the awareness programme said the new tax regime allows a generous compliance period to implement the new levies in the country. Referring to corporate tax, they said businesses with a financial year starting on June 1, 2023, and ending on May 31, 2024, will have until February 28, 2025, to file their tax returns and make payments.

"Where a company's first tax period starts on January 1, 2024, and ends on December 31, 2024, the return and payment would need to be made before September 1, 2025," according to the Finance Ministry statement issued last month.

A step forward

Mohammad Ali Rashed Lootah said the introduction of corporate tax is a step forward in modernising the UAE's economic ecosystem and driving its business and investment competitiveness in line with international standards.

"We share the responsibility of educating our business community and ensuring they are provided with the technical knowledge and guidance on the laws, governance frameworks and policies that impact their next chapter of growth and strengthen the emirate's economic and financial environments,” he said.

The Ministry of Finance has launched the corporate tax public awareness programme following the issuing of the Federal Decree-Law on Taxation of Corporations and Businesses last month. The session in Dubai included a presentation shedding light on the corporate tax law and introducing participants to key features of the new regime, including scope, rate, key definitions, exempt persons, free zones, administration, and timelines.

“We will continue to work with the Ministry of Finance and the FTA to provide more awareness sessions and guidance on corporate tax as part of our commitment to delivering for our members and to help create the conditions for businesses to thrive and achieve further growth, innovation and prosperity," he said.

The main objective of the awareness programme is to support the various business sectors and introducing their teams of specialists – including corporate finance managers, chief finance officers, legal advisors and experts, tax auditors and agents, accountants, and business owners – to the general framework of the law and how to comply with it.

“Launching the corporate tax public awareness programme reflects our commitment to communicating with all stakeholders – and especially entrepreneurs and businesses operating in the UAE – in order to shed light on the new corporate tax law and regime and provide the business community with corporate tax-related information from an official, reliable source,” Al Khouri noted.

“We hope that this session – and other upcoming sessions – will lead to more corporate tax compliance, while enhancing the investment environment, and bringing more prosperity to the business sector and the economy in the future,” he said.

The Ministry of Finance is set to hold more in-person corporate tax public awareness sessions across all emirates, along with virtual sessions, held via a digital platform.

— muzaffarrizvi@khaleejtimes.com