Taxes in the UAE
The Emirates tax system is based on the principles of neutrality and minimal burden for legal entities.
VAT plays an important role in the state budget. Legal entities are required to register with the VAT system if their turnover exceeds AED 375,000 per year (~$100,000). At lower turnovers, registration is voluntary.
A corporate tax is a form of direct tax levied on the net income or profits of corporations and other organizations from their businesses. Introduced into the UAE from June 1, 2023.
Main differences between VAT and CIT
- The rate is 5%
- The main goal is taxation of consumption, that is, the tax is levied on the final consumer of goods and services
- Applies to certain goods and services, including food, medical products, transportation and more
- The obligation to pay VAT lies with enterprises that sell goods and services
- The rate is 9%, but there are benefits (companies registered in free economic zones are exempt from payment)
- The tax is levied on a company’s profits, which are credited to their corporate accounts
- Differences in rates and rules in different emirates