The UAE Corporate Tax regime is effective for Financial Years starting on or after 1 June 2023.
Examples:

• A Business that has a Financial Year starting on 1 July 2023 and ending on 30 June 2024 is subject to UAE Corporate Tax from 1 July 2023 (which is the beginning of the first Financial Year that starts on or after 1 June 2023).
• A Business that has a Financial Year starting on 1 January 2023 and ending on 31 December 2023 will become subject to UAE Corporate Tax from 1 January 2024 (which is the beginning of the first Financial Year that starts on or after 1 June 2023).

No, Corporate Tax and VAT are two different types of taxes. Both will apply in the UAE.
If you are a registered business for VAT, you will have to pay VAT and Corporate Tax separately. If your business is not registered for VAT you may still have to pay Corporate Tax.

No, Corporate Tax and Excise Tax are two different types of taxes. Both will apply in the UAE.

Natural persons and juridical persons
0% for Taxable Income up to and including AED 375,000.
9% for Taxable Income exceeding AED 375,000
Qualifying Free Zone Persons
0% on Qualifying Income.
9% on Taxable Income that is not Qualifying Income

Qualifying Free Zone Person is a Free Zone Person that meets all the conditions of the Free Zone Corporate Tax regime and hence benefits from that regime.
The conditions of the Free Zone Corporate Tax Regime require a Qualifying Free Zone Person to:

• maintain adequate substance in a Free Zone;
• derive Qualifying Income;
• not have made an election to be subject to the regular UAE Corporate Tax regime;
• comply with arm’s length principle and transfer pricing rules and documentation requirements;
• prepare and maintain audited financial statements

Failure to meet any of the conditions results in a Qualifying Free Zone Person losing its qualifying status and not being able to benefit from the Free Zone Corporate Tax regime for five Tax Periods.
The Free Zone Corporate Tax regime is available only to Free Zone Persons, and this term is also used to determine what income can benefit from the regime by treating income from transactions with other Free Zone Persons as Qualifying Income.

Qualifying Income is the income that can benefit from the 0% Corporate Tax rate under the Free Zone Corporate Tax regime.
Qualifying Income includes income derived from transactions with other Free Zone Persons as well as domestic and foreign sourced income from any of the ‘Qualifying Activities’. It does not include income derived from performing any of the ‘Excluded Activities’.

Qualifying Activities are activities that can benefit from the Free Zone Corporate Tax regime regardless of whether the income is derived from transactions with another Free Zone Person, a Person in the mainland UAE, or from a foreign Person.
Following are the Qualifying Activities:

• Manufacturing of goods or materials
• Processing of goods or materials
• Holding of shares and other securities
• Ownership, management and operation of ships
• Reinsurance services
• Fund management services
• Wealth and investment management services
• Headquarter services to Related Parties
• Treasury and financing services to Related Parties
• Financing and leasing of aircraft, including engines and rotables
• Distribution of goods or materials in or from a Designated Zone
• Logistics services
• Ancillary Activities to the above-mentioned ones

In essence, the allocation of goods or materials needs to occur within or originate from a specifically assigned area, termed the Designated Zone. Furthermore, any goods or materials entering the jurisdiction must be brought in through the Designated Zone.

Excluded Activities are activities that would disqualify a Qualifying Free Zone Person from the Free Zone Corporate Tax regime, irrespective of whether those activities are performed exclusively within the Free Zone and regardless of whether the related income is derived from transactions with a Free Zone Person or as part of undertaking a Qualifying Activity. Excluded Activities specifies the following:

• Transaction with natural persons, except in relation to:
• Ownership, management and operation of ships
• Fund management services
• Wealth and investment management services
• Financing and leasing of aircraft
• Regulated banking activities
• Regulated insurance activities, other than reinsurance services
• Regulated finance and leasing activities, other than intra-group treasury and financing activities and aircraft finance and leasing activities
• Ownership or exploitation of Immovable Property, other than Commercial Property located in a Free Zone
• Ownership or exploitation of intellectual property assets
• Any activities that are ancillary to the above.

The following Persons are automatically exempted from UAE Corporate Tax:

• The UAE Federal and Emirate Governments and their departments, authorities and other public institutions;
• Companies wholly owned and controlled by a Government Entity that carry out a Mandated Activity;
• Businesses engaged in the extraction of UAE Natural Resources or related non-extractive activities that are subject to Emirate-level taxation, subject to meeting certain conditions; and
• Qualifying Public Benefit Entities.

Businesses with Revenues of AED 3 million or below in a relevant Tax Period and previous Tax Periods can elect for ‘Small Business Relief’ for Tax Periods that end on or before 31 December 2026.
Electing for Small Business Relief means that a Taxable Person will be treated as having no Taxable Income during the relevant Tax Period and that they can benefit from simplified compliance obligations. To claim Small Business Relief, an election must be made in the Taxable Person’s Corporate Tax Return in the relevant Tax Period.

All income derived from transactions with other Free Zone Persons is treated as Qualifying Income, unless the other Free Zone Person is not the beneficial recipient of the relevant transaction or supply or the income is derived from an Excluded Activity. Income derived from another Free Zone Person that is not derived from an Excluded Activity, will be treated as Qualifying Income irrespective of whether that other Free Zone Person can benefit from the Free Zone Corporate Tax regime.

Yes. All Free Zone Persons will be required to register, obtain a Tax Registration Number, and file a Corporate Tax return, irrespective of whether they are a Qualifying Free Zone Person or not.

The Corporate Tax Law makes a distinction between unincorporated and incorporated partnerships.
“Unincorporated Partnerships” (as defined in the Corporate Tax Law) are essentially a contractual relationship between two or more Persons, as opposed to being a distinct juridical person separate from their partners / members. Unincorporated Partnerships are treated as ‘transparent’ for UAE Corporate Tax purposes. This means that an Unincorporated Partnership is not subject to UAE Corporate Tax in its own right. Instead, each partner is subject to UAE Corporate Tax on their share of the income from the Business conducted through the partnership.
Incorporated partnerships include limited liability partnerships, partnerships limited by shares and other types of partnerships where none of the partners have unlimited liability for the partnership’s obligations or other partners’ actions. Such partnerships are subject to Corporate Tax in the same manner as a corporate entity.

Family Foundations (including certain trusts) are independent juridical persons with separate legal personality, and would therefore prima facie be subject to UAE Corporate Tax in their own right. However, these types of Family Foundations can apply to be treated as transparent “Unincorporated Partnerships” for UAE Corporate Tax purposes, resulting in the founder/settlor and the beneficiaries of the foundation to remain to be seen as owners of the assets held by the foundation. This would generally prevent the income of the foundation from attracting UAE Corporate Tax.
Other types of trusts (for example, trusts established in DIFC or ADGM) are a contractual relationship between two or more Persons (e.g., the beneficiary, settlor, and trustee) and do not have separate legal personality. These types of trusts will by default be treated as transparent vehicles for UAE Corporate Tax purposes.

The following income is exempt from UAE Corporate Tax:

• Dividends and other profit distributions received from UAE incorporated or resident juridical persons;
• Dividends and other profit distributions received from a Participating Interest in a foreign juridical person;
• Certain other income (e.g., capital gains, foreign exchange gains / losses and impairment gains or losses) from a domestic or foreign Participating Interest;
• Income from a foreign branch or Perma
nent Establishment where an election is made to claim the “Foreign Permanent Establishment” exemption; and
• Income earned by non-residents from the operation or leasing of aircrafts or ships in international transportation.

All Taxable Persons must be registered before they file their first Corporate Tax Return. The Federal Tax Authority may register a Taxable Person, who is not otherwise registered, at their discretion.

Taxable Persons will be able to electronically register for UAE Corporate Tax through the Emara Tax Portal.