UAE Announces Major Tax Rule Update for Residents

The UAE has issued a new ministerial order aimed at clarifying the parameters for company tax responsibility within the country.

UAE business owners would only be required to pay corporation tax if their yearly turnover surpasses AED 1 million ($272,000).

وزارة المالية تعلن عن صدور قرار مجلس الوزراء بشأن المعاملة الضريبية للأفراد الذين يمارسون الأعمال أو أنشطة الأعمال لأغراض قانون ضريبة الشركات.#ضريبة_شركات_الإمارات #ضريبة_الشركات #الإمارات pic.twitter.com/fbSxH9YynB

— وزارة المالية | الإمارات (@MOFUAE) May 17, 2023

In addition, the decision emphasizes that income derived from real estate and personal investments will not be considered taxable.

The UAE implemented corporate taxation last year, with a standard statutory rate of 9 percent for taxable profits up to AED 375,000. Corporate tax on corporate earnings will be implemented for fiscal years beginning on or after June 1, 2023.

"For example, if an individual who is a UAE Resident operates an online business and the combined annual turnover from this business exceeds AED1 million, under the new decision, the UAE Resident business income from the online business would be subject to Corporate Tax," the Ministry of Finance clarified.

"However, if the UAE Resident also earns income from a rental property and personal investments, these sources of income would not be subject to Corporate Tax as they fall under the out-of-scope categories," it said.