No corporate tax effects on business or prices
The statement of the Undersecretary of the Ministry of Finance, Younis Haji Al-Khoury, excludes the existence of negative impacts on the business environment in the UAE and its position as a preferred destination and a regional financial center due to the application of the corporate tax.
He stresses that the corporate tax rate adopted by the UAE (9%) is the lowest in the world, and includes many exemptions, which maintains the UAE’s position as a global logistics hub. It also indicates that there is coordination between the concerned authorities to ensure the smooth implementation of the new tax system without affecting the markets.
Al-Khoury confirmed that the ministry issued the necessary decisions before the start of implementing the new system, and that all companies are obligated to register in the corporate tax system even if they are not qualified.
Two new decisions were announced that define the characteristics of applying the corporate tax system to legal persons in the free zones in the country. This includes legal persons incorporated in a free zone and who carry out their activities exclusively within the free zone. Corporate tax applies only to income generated from activities that take place in or through the free zone.
The Ministerial Resolution includes eligible activities and excluded activities, and specifies conditions and exceptions. Certain activities are excluded from the corporate tax regime, such as transactions with natural persons and certain regulated financial services activities and assets.