UAE to subject Corporates with a 9% Corporate tax and lift its tax-free status

UAE confirms a 9 per cent corporate tax from June 2023 for the foreseeable future, the Finance ministry announced, to regularize the business sector. It will aid in attracting corporate giants to house their regional operations. This step will continue to protect current entrepreneurs while inviting new ones with improvised pricing structures and packaging. Corporate tax benefits that are now provided to free zone enterprises that abide by all legal requirements and don't do business with mainland UAE will still be honoured under the new corporate tax regime. Due to UAE corporate taxation, the free zones will now receive more attention than the mainland to grow. It will spur more competition on a global level and incentivize startups and small businesses to self-invest and model a stronger entrepreneurship ecosystem.

All companies registered in the UAE are eligible for this corporate tax. Companies are expected to pay the proposed 9% corporation tax if their income exceeds AED 375,000 as net profit. Startups and small enterprises are free from the same. This tax is in place while the "Pillar Two" rule is implemented. The provision was designed to eliminate anomalies in which multinational corporations ended up paying no or very little tax on their business operations. Multinationals will thus be subject to 9% taxation until UAE adopts the rule.