Free Zone Corporate Tax
KEY POINTS
The Corporate Tax Law will be effective from 1 June 2023 with a headline rate of 9%.
The regime includes features that represent best practices in international taxation.
Several exemptions are available for businesses operating across strategic sectors.
Free zone persons can continue to maintain their 0% tax position subject to meeting certain conditions.
General anti-avoidance and transitional rules apply from the date the law is published in the Official Gazette.
Taxable person
Generally, CT will apply to both resident and nonresident persons.
A resident person will include:
A juridical person incorporated otherwise established or recognized in the UAE (including free zones)
A juridical person incorporated otherwise established or recognized outside of the UAE, that is effectively managed and controlled in the UAE
A natural person that conducts business activity in the UAE
Free zones
The Corporate Tax Law introduces the concept of a “Qualifying Free Zone Person” (QFZP), which is broadly defined as a company or branch registered in a free zone that:
Maintains adequate substance in the UAE
Derives qualifying income (to be specified through a Ministerial Decision)
Satisfies transfer pricing requirements
Meets any other conditions to be prescribed through a Ministerial Decision
A QFZP will still be subject to CT but may benefit from a 0% rate on its qualifying income. A QFZP can elect to forego this preferential regime and be subject to the standard CT rate. For more information and Quotation Click here
