The new corporate tax regime exempts profits of up to AED 375,000 in a bid to support startups and small businesses. It has been clarified that the corporate tax does not apply to personal income from investments and real estate, as well the income earned from employment. No corporate tax is payable on dividends received from shares in companies, whether located in the United Arab Emirates or overseas.
His Excellency Younis Haji Al Khoori, the UnderSecretary of the Ministry of Finance, believes that the introduction of the corporate tax regime will further strengthen the United Arab Emirates as a preferred destination for trade and investment.
The United Arab Emirates currently has Double Taxation Avoidance Agreements with 137 countries around the world. Taxes paid by multinational companies will be allowed to be credited against corporate tax payable in the United Arab Emirates. This move provides an incentive to foreign companies looking to expand to the Middle East to set up their base in the United Arab Emirates.
Even after the introduction of corporate tax, the tax rate in the United Arab Emirates remains one of the lowest in the world. The average corporate tax rate across 180 jurisdictions worldwide has been determined to be 25.34% with Comoros levying the highest corporate tax rate of 50%. The second and third highest corporate tax rates in the world are Puerto Rico and Suriname, with 37.5% and 36% respectively.
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