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In A first, UAE Govt Introduces Corporate Tax Rates Effective From 2023
Writer: Snehadri Sarkar
While he is a massive sports fanatic, his interest also lies in mainstream news and nitpicking trending and less talked about everyday issues.
Others/World, 2 Feb 2022 7:20 AM GMT
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A post-graduate in Journalism and Mass Communication with relevant skills, specialising in content editing & writing. I believe in the precise dissemination of information based on facts to the public.
Creatives : Snehadri Sarkar
While he is a massive sports fanatic, his interest also lies in mainstream news and nitpicking trending and less talked about everyday issues.
The new tax rule will come into action from June 2023 and will cover all business activities in the UAE, barring the extraction of natural resources. The tax will also be inflicted when the income exceeds USD 102,000 or 375,000 dirhams.
The United Arab Emirates (UAE) on January 31 announced that it is set to impose a 9 per cent corporate tax rate. This announcement came when yet another Asian major economy, India, declared its Union Budget for the year 2022-23 and is expected to impact businesses that are based in the UAE as it was widely known for being a tax haven.
Both UAE and India share good relations even on the trade front as India is the Emirati nation's third-biggest trading partner. As per the Indian Embassy in UAE, significant investments made by Indian companies in the UAE would be more than USD 85 billion.
The website also lists major Indian companies like the Taj Group of Hotels, Hinduja Group, JK Cement, Ashok Leyland, Mahindra, Dabur, IL&FS, and Essar Steel, which are heavily invested in the UAE.
UAE- A Tax Haven!
The brand new corporate tax implementation comes in as the UAE government desires to contemporize its economy and acclimate to international taxation norms. Furthermore, the tax on corporate profits comes as the country's administration aims to help large economies close tax avoidance loopholes.
"The UAE reaffirms its commitment to meeting international standards for tax transparency and preventing harmful tax practices," Younis Haji Al Khoori, undersecretary of UAE ministry of finance, was quoted as saying by a News18 report.
Furthermore, he also stated that the UAE supported efforts to introduce a global minimum tax rate as well.
Experts say the move will strengthen the Gulf nation's fiscal framework. The UAE called its tax rate the most competitive globally.
When & How Will The Tax Be Applied
The new tax rule will come into action from June 2023 and will cover all business activities in the UAE, barring the extraction of natural resources. The tax will also be inflicted when the income exceeds USD 102,000 or 375,000 dirhams.
Meanwhile, the tax will not be imposed on foreign investors who did not conduct business activities in the country.
The UAE, known as a tax haven, remains a lucrative destination due to its 'free zones'. These free zones have led to growth as foreign investors could own businesses without any local partner.
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