Businesses and Incomes that Will be Exempted from UAE Corporate Tax

Tally Solutions | Updated on: April 20, 2023

The Corporate Tax in UAE, announced on 31 January 2022 by the UAE Ministry of Finance, is considered the lowest corporate tax rate among the GCC countries. The corporate tax in UAE will be levied at the rate of 9%.

Additionally, some segments of businesses and incomes will be exempted from UAE corporate tax. Let’s look at the incomes and businesses exempt from corporate tax.

Income less AED 375,000

As per the UAE Ministry of Finance, UAE corporate tax will normally apply to income earned from activities held in UAE. However, no corporate tax will be payable unless the annual net income of the business exceeds AED 375,000. It makes the corporate tax rate for a business or a trade activity 0% if the income does not exceed AED 375,000.

Individual's salary

The corporate income tax law in UAE exempts an individual earnings salary and other employment revenue, whether acquired from working in the public or the private sector in UAE.

Additionally, for the business owners, employee-related expenses such as salary, health insurance, bonus, and other financial compensations can be deducted from the taxable income.

Income by individuals in their personal capacity

The corporate income tax law in UAE exempts individual earnings in the following cases:

• Interests, profits, and other income earned by an individual living in UAE from bank deposits or saving schemes
• Earnings from investment in real estate by individuals in their personal capacity
• Dividends, capital gains, and other revenue earned by individuals from owning shares or other securities in their personal capacity

Will freelance professional be subject to UAE CT?

UAE corporate tax law will generally apply to income earned from activities carried out under a freelance license/permit, albeit no corporate will be payable unless the annual net earnings of the freelance professional in UAE exceeds AED 375,000.

Businesses engaged in the extraction of natural resources

Businesses that extract natural resources such as oil and gas are exempt from corporate tax as these businesses will remain subject to the current Emirate-level corporate taxation.

How can TallyPrime help?

Whether you are a legal person or an individual, TallyPrime can easily manage your business requirements and help you be UAE corporate tax ready. Right from generating VAT-compliant invoices to return filing, TallyPrime contains all that is required while you focus on your business growth.

The built-in capability of error detection and correction ensures that you file accurate VAT returns always. Depending on the location of your business, you can record transactions with relevant taxes for designated zones.

With the experience of 30+ years in the market, which has gained the trust of more than 2 million businesses worldwide, TallyPrime helps your business with its integrated features, including:

• Easy and quick to configure the tax details via VAT Rate Set-up
• Ease of managing reverse charge transactions with complete visibility of liability booked and liability yet to be booked
• Account and manage VAT on advance receipts with the help of an advance receipt report
• Generate an Audit File as prescribed by Federal Tax Authority (FTA) at a click of a button

Know more about Corporate Tax

• Corporate Tax-Free Zones UAE
• Allowable Deductions Under UAE Corporate Tax Law
• Violations And Penalties Under UAE Corporate Tax Law

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