Kavan Choksi on UAE's New Federal Corporate Tax on 2023

Assume you own a company in the UAE. In that case, Kavan Choksi believes that it is critical that you understand the federal corporate tax proposed by the Ministry of Finance on business profits. Based on the new rules, businesses must file for the UAE corporate tax of 9% beginning with their first fiscal year starting June 1, 2023.

According to Kavan Choksi, the proposal is due to increased competition from neighboring cities, putting pressure on international corporations to relocate their Middle East headquarters to the kingdom. Furthermore, the UAE corporate tax regime should aid in the adoption of best practices from around the world while reducing the compliance burden on businesses.

The government stated that it would impose the corporate tax on profits reported by UAE businesses in financial statements prepared under internationally accepted accounting standards with minimal exceptions and adjustments. Additionally, it would apply to all businesses and commercial activities, except natural resource extraction, which will continue to be under taxation at the emirate level.

According to Kavan Choksi, the UAE corporate tax regime will be one of the most competitive in the world. To assist small businesses and start-ups, it has a standard statutory tax rate of 9% and a 0% tax rate for taxable profits up to AED375,000. Personal income earned by individuals that do not arise from any form of commercial activity in the UAE, on the other hand, is exempt from corporate tax.

Kavan Choksi believes that the UAE, as a leading jurisdiction for innovation and investment, can help businesses grow both locally and globally. As a result, the certainty of a competitive and outstanding corporate tax regime, combined with the UAE's extensive double tax treaty network, will solidify the country's position as a world-leading business and investment hub.