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The United Arab Emirates (UAE) on December 9 issued Federal Decree-Law No. (47) of 2022 on the taxation of corporations and businesses (‘CT law’). The unofficial translation was released by the UAE Ministry of Finance (MoF) on its website, together with FAQs that provide a number of clarifications.
The CT law applies for financial years starting on or after June 1, 2023. The CT law will be effective 15 days after publishing in the official gazette.
Following the consultation document (issued in April 2022), the CT law clarifies and expands on many key provisions. However, a number of areas remain to be further clarified in subsequent cabinet and ministerial decisions and tax authority guidance.
Action item: The low CT rate generally, up to 9%, combined with a reduced compliance burden for businesses are intended to further strengthen the UAE’s position as a global hub for business and investment. Businesses operating in the United Arab Emirates will need to prepare for the introduction of UAE CT although certain aspects remain uncertain. The introduction of the UAE’s federal CT regime represents a significant change for companies with existing UAE operations and for investors looking into business expansion or using the United Arab Emirates as a holding company location.
Global and US Tax Knowledge Management Leader, PwC US