UAE Corporate Tax Law - Effective from 1st June 2023

Tally Solutions | Updated on: April 20, 2023

On Friday, the government of UAE released the corporate tax law, and the same is available on their official website. Considered one of the crucial milestones in the process of implementing the corporate tax in the UAE.

Under the new rule, businesses and corporations with taxable profits surpassing AED 375,000 ($102,000) will be required to pay a standard 9% on or after June 1, 2023, as previously announced at the start of this year.

Taxable profits below the threshold as mentioned above will be subject to a 0% corporate tax rate. As per the UAE Ministry of Finance, the corporate tax rule is expected to position the country as a leading global hub for business and investment. It will add to the nation's development and transformation objectives while ensuring tax transparency and preventing malpractices.

The corporate tax UAE is made available through a 'Federal Decree-Law no. 47 of 2022 on their official website. To download the UAE corporate tax law, you can visit the Ministry of Finance website.

Corporate Tax Limit and Applicability in UAE

How is Corporate Tax in UAE Calculated?

When will the corporate tax come into effect?

The Ministry of Finance UAE has said that the new tax will be applied for financial years beginning on or after June 1, 2023.

The new tax will be due on July 1, 2023, for any business or entity whose fiscal year begins on July 1, 2023, and ends on June 30, 2024
A business with a financial year starting on January 1, 2023, and ending on December 31, 2023, will be subject to UAE Corporate Tax from January 1, 2024 (which is the onset of the first financial year that starts on or after June 1, 2023)

Takeaway and next steps for businesses:

With the corporate tax law already out, there is a lot to understand for businesses. Now, financial statements will become all the more crucial for businesses as the net profit on these statements becomes the crux to arrive at the corporate tax that a business is liable to pay.

Here are a few things that businesses can do to prepare for the corporate tax in UAE:

It is essential for companies to plan ahead and be ready for the upcoming corporate tax rule, as it will have profound implications on the flow of business
Take stock of your previous financial records to check your business's eligibility for corporate tax
Given that financial reports are becoming all the more crucial now, businesses need to have robust accounting software that ensures accuracy and compliance
Get your team trained and updated on corporate tax rule
Assess how the UAE corporate tax may impact your business' obligations and liabilities under contracts with customers and suppliers
Understand Corporate tax's implication on your books of account and financial statements that you'd require to stay compliant

How TallyPrime can help you remain compliant with the UAE corporate tax?

With the corporate tax levied in UAE, businesses must ensure they have the right tools for a smooth transition. Amidst all these things, one of the top priorities is to have the right business management software that not only ensures compliance with corporate tax law but also helps manage your business efficiently.

TallyPrime is a business management that comes with a wide range of business modules to cater to the growing needs of your business. The software's ability to instantly generate accounting, inventory and financial statements like profit and loss account a/c, balance sheet, and so on is one of TallyPrime's powerful features that ensures seamless business operations.

In addition, it not only helps you prepare for corporate tax, but it also provides complete support for UAE VAT, from creating tax invoices to accurately filing VAT returns.

Have you tried TallyPrime? Book a free demo, and we are sure you'll be delighted to see how TallyPrime adapts to your business.

Know more about Corporate Tax

Explore More Products