United Arab Emirates

Under the Emirate-level tax decrees, income tax is payable under a progressive rate system, with rates up to 55%. However, in practice, these tax decrees have not been applied. Instead, branches of foreign banks are subject to income tax at a flat rate of 20% under separate Emirate-level bank decrees. Companies engaged in UAE oil and gas and petrochemical activities are subject to income tax at varying rates under their individual UAE concession agreements or fiscal letters.

The Federal UAE CT Law, which is effective for each taxable person’s new financial year beginning on or after 1 June 2023, is applicable across all Emirates and applies to all business and commercial activities, except to the following exempt persons (subject to conditions):

• UAE government entity.
• UAE government-controlled entity.
• Person engaged in an extractive business in the United Arab Emirates.
• Person engaged in a non-extractive natural resource business in the United Arab Emirates.
• Qualifying public benefit entity.
• Qualifying investment fund.
• Public pension or social security fund, or a private pension or social security fund that is subject to regulatory oversight of the competent authority in the state and that meets any other conditions that may be prescribed by the Minister.
• Juridical person incorporated in the state that is wholly owned and controlled by certain exempt persons.
• Any other person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister.

UAE CT is applicable at the following rates:

* Please refer to Free Zones in the Tax credits and incentives section.

Federal Decree Law No. 60 of 2023 amended specific provisions of the UAE CT Law. The amendments introduce definitions for (i) ‘top-up tax’ (with references to the Pillar Two rules issued by the OECD) and (ii) 'multinational enterprise' (MNE). Law No. 60 also stipulates that further details would be issued in due course with regards to imposing the top-up tax on MNEs so that the total effective tax imposed on MNEs is 15%.