Before you start thinking about the new Corporate Tax Law, you should have a clear understanding of what is not subject to it. This includes a review of the exemptions and treatment of free zones. The legal restructuring may be required to optimize your corporate tax position. If you are still not sure what is exempt, get help from a professional tax agent in Dubai.
Regulated investment funds and real estate investment trusts:
In the UAE, both real estate investment trusts and regulated investments are exempt from corporate tax. Real estate investment trusts have a more complicated tax structure. For example, mutual funds can invest in stocks and bonds, options, commodities, money market securities, and more. In a mutual fund, ownership of the asset transfers automatically, and the beneficial owner enjoy the real benefits of ownership.
Free-trade zones:
A free-trade zone is a special business location in the UAE with special customs, tax, and import regimes. Free-trade zones also offer special services, such as labor recruitment and additional support. Each free zone is centered on one or more categories of business industry. Each FTZ is governed by an independent Free Zone Authority, which grants licenses to companies and provides assistance to companies in setting up a business in the zone.
Some other businesses:
The UAE is in the process of introducing a federal corporate tax. The new tax will be 9% and will take effect on June 1, 2023. Companies that do not earn profits in the UAE will not be subject to the new tax. The UAE has long sought to attract foreign investment, and its low corporate tax rates have contributed to its transformation. UAE corporate tax rates are relatively low, even by global standards, though many corporates will still need to pay top-up tax in their home country.
Generally, all other businesses are exempt from corporate tax in the UAE, with some exceptions. Free zones have special tax and customs regimes. In free zones, companies can enjoy a corporate tax exemption of up to 50 years and a 100% exemption on export and import taxes. However, these free zones do not permit businesses that conduct business with the mainland UAE. In addition, if you have a business in a free zone, you should register it and file a CT return. You should also comply with all applicable regulations related to transferring pricing, documentation requirements, and OECD guidelines.
