Corporate Tax Exemptions Explained

With taxation in the UAE now introduced to local businesses, a question we have been frequently asked is: are there any exemptions?

Within corporate finance, there are opportunities for businesses to minimize their obligations and improve their cash flow, and the UAE is no different. Here, there are corporate tax exemptions that allow qualifying business owners relief from the tax.

Here, we will highlight some of the key tax exemptions currently in place in the country.

  1. Anything government-related. This applies to both government entities and government-controlled entities. Essentially, the 9% corporate tax only applies to the private sector, with anything public sector exempt. This will likely not have any impact on your business operations, but it’s worth knowing.
  2. Natural resource businesses. Businesses involved in the extraction of natural resources have actually been subject to their own taxation rules for a lot longer than the rest of the country. This is because there is more of a global vision for this industry, as it competes with markets across the world rather than locally. If your business is involved in the extraction of natural resources, there will be no change as a result of the corporate tax.
  3. Any business earning under AED 375,000. The corporate tax is only applicable to businesses that earn above AED 375,000 per tax year. If your business generates less than AED 375,000 a year, it will not be subject to the tax. This is the case for both freelancers and business owners. If you do earn above the threshold, only what is earned above that number is subject to the tax.
  4. Currently, Free Zones. The 9% corporate tax is being rolled out in phases, meaning free zone companies are not currently subject to it. At the moment, it’s only relevant to mainland companies, with announcements expected on Free Zone eligibility in the future. Once an update is provided by the Ministry of Finance, we will share the announcement on our website.
  5. Small Businesses Eligible for Small Business Relief. Until December 31st 2026, the UAE government are offering small business relief for companies with revenue below AED 3,000,000. Your business may well be eligible for the relief, so it’s worth checking with the Ministry of Finance as cases are circumstantial.

We are currently offering business owners a complimentary corporate tax consultation, to ensure you’re up to date with your obligations. Reach out to our team if you have any doubts and we will be more than happy to clear them up for you.

Connect with the team by calling 800 BIZ or email us at setup@bizincorp.ae.

Navigating the UAE’s New 9% Corporate Tax

Setting up a business involves negotiating a labyrinth of rules and regulations, especially when it comes to tax laws. At the Business Incorporation Zone, we’re here to help guide you through these complexities, particularly with the introduction of the UAE’s new 9% corporate tax. 

This change, announced in 2022, has come into effect from June 1, 2023. It sets a 9% tax on profits exceeding AED 375,000 ($102,000). However, don’t fret if this sounds intimidating. This change is designed to foster the growth of small and medium-sized businesses like yours. 

Understanding the Corporate Tax 

The 9% tax will only be levied on profits above the AED 375,000 threshold, meaning you won’t be taxed for earnings below this. This encourages the growth of small businesses and startups, and you can quickly estimate your possible tax liabilities using our online tax calculator

Corporate Tax for Residents & Non-Residents 

If you’re a UAE resident, the new tax law offers certain exemptions. For instance, if you’re a freelancer earning above the AED 375,000 threshold, you will have to pay corporate tax. But remember, income from bank deposits, savings and investment programs, dividends, foreign exchange gains, or real estate income from economic activities won’t be taxed. 

For non-residents with an establishment in the UAE, corporate tax will also apply, although exemptions exist for income from operating aircraft and ships in international space or earnings via an investment manager on real estate or other investments. 

Implications for UAE Free Zone Businesses 

The new tax law has important consequences for businesses in UAE’s free zones, crucial to the country’s international trade. But don’t worry, the law is designed to align with the UAE Government’s economic reform agenda. If you comply with transfer pricing rules and maintain relevant documentation, your business may benefit from significant exemptions. 

Decoding Permanent Establishment and Corporate Tax Rates 

Permanent Establishment is a term you might come across often. In simple terms, it’s about whether a foreign entity has a strong enough presence in the UAE to warrant being taxed. The new tax law imposes a 9% corporate tax rate on taxable profits above AED 375,000. 

Understanding the Withholding Tax Rate and Free Zone Conditions 

You may also hear the term “withholding tax”. This is a tax that applies to certain types of UAE sourced income paid to non-residents. However, it’s set at a 0% rate, meaning, in practice, no withholding tax is due, simplifying things for UAE businesses and foreign recipients of UAE sourced income. 

Finally, for businesses in the Free Zone, the tax law provides preferential conditions under certain criteria, potentially offering a 0% tax rate on their “Qualifying Income”. 

Always Here to Help 

While this might seem a lot to digest, remember we at BIZ are always here to support you. Whether you need help understanding the impact of these new laws on your business, assistance with maintaining the required documents, or advice on how to leverage these changes to maximize your growth potential, we’ve got you covered. 

In addition to this, we can also help with all aspects of your business setup. This includes advising on the optimal location for your business, taking care of all registration paperwork, and even providing post-setup support services. Our team of experts are ready and available to answer any questions or concerns you may have. 

كيفية التكيف مع حصة العمال الإماراتيين

في حين أن التركيز كان مُنصبًّا على إدخال قوانين ضريبية جديدة في دبي، كان هناك أيضا إعلان تمت مشاركته في نفس الوقت: تحديث حصة العمال الإماراتيين.

يجب على الشركات التي تتخذ من الإمارات العربية المتحدة مقرا لها والتي تضم أكثر من 50 موظفا أن يكون لديها عدد لا يقل عن 2٪ من الموظفين الإماراتيين في قوتها العاملة.

إليك كل ما تحتاج لمعرفته حول حصة العمال الإماراتيين، وكيف يمكنك تكييف عملك معها.

حصة العمال الإماراتيين

أولا، حصة العمال الإماراتيين ليست في الواقع مفهوما جديدا. فقد طُلب من الشركات العاملة في الصناعة المصرفية والمالية الحفاظ على حصة قدرها 4٪ من الموظفين الإماراتيين، في حين طُلب من الشركات في صناعة التأمين الحفاظ على حصة قدرها 5٪. تخضع هذه القواعد لعدد الموظفين في الشركة.

كان هذا مطلبا محددا للغاية يعتمد على الصناعة. لكن الآن، سيتطلب على كل شركة في الإمارات لديها أكثر من ٥٠ موظف، أن يكون ٢٪؜ منهم إماراتيين، مما يعني موظف إماراتي واحد من كل 50 موظفا.

حصة العمال في دبي

حصة العمال الإماراتيين هي جزء من مبادرة التوطين في الإمارات العربية المتحدة، والتي تهدف إلى زيادة مشاركة المواطنين الإماراتيين في القوى العاملة في القطاع الخاص وتقليل اعتماد البلاد على العمالة الأجنبية. تشمل المبادرات دعم برامج التدريب والتعليم والحوافز المالية للشركات التي توظف مواطنين إماراتيين.

على الرغم من أنها سياسة مثيرة للإعجاب بالنسبة للإماراتيين المحليين، إلا أن هذا يتطلب منك أن تكيّف مشروعك على الامتثال لتلك لحصص. إليك كيفية القيام بذلك.

التكيف مع حصة العمال الإماراتيين

فيما يلي بعض الطرق التي يمكنك من خلالها الامتثال للقوانين الجديدة.

  • قم بتطوير استراتيجية التوظيف: إذا كنت على أعتاب تلبية حصة عدد الموظفين، فيجب عليك اتخاذ خطوات نحو ضمان أن عملية التوظيف القادمة الخاصة متناسبة مع حصة العمالة الإماراتية. للقيام بذلك، تأكد من أن استراتيجية التوظيف الخاصة بك تهدف بشكل إيجابي إلى توظيف الإماراتيين. يمكنك جذب الموظفين الإماراتيين إلى مناصبك من خلال الشراكة مع المدارس والكليات والجامعات المحلية للترويج لعملك وتحديد المرشحين المحتملين، وتقديم التدريب الداخلي أو التلمذة الصناعية للطلاب الإماراتيين، مما يجعل عملك في المقدمة للمجتمع الإماراتي.
  • تدريب وتطوير موظفيك الحاليين: في حين أن هناك بطبيعة الحال الكثير من التركيز على عنصر التوظيف، ينبغي أيضا التركيز على تحسين مهارات موظفيك الإماراتيين الحاليين لزيادة فرص الاحتفاظ بهم. يمكنك القيام بذلك من توفير الوصول إلى الدورات التعليمية والتدريبية لموظفيك الحاليين، وإتاحة الفرصة لهم للتسجيل في برامج التوجيه والتدريب، وخلق بيئة نمو لموظفيك للعمل فيها.
  • الشراكة مع برامج التوطين: هناك العشرات من برامج التوطين التي توفر للشركات إمكانية الوصول إلى مجموعة من المرشحين الإماراتيين المتميزين. الشراكة مع هذه البرامج يعتبر خطة استراتيجية منطقية، ويمكن أن تفتح الفرصة للحصول على إعانات ومنح خاصة لتدريب العمال الإماراتيين.
  • كن مرنا: الحقيقة هي أنه مع قانون حصة الإماراتيين، قد تحتاج إلى أن تكون مرنا مع المؤهلات ومستويات الخبرة الخاصة بملء منصب ما في شركتك. قم بتكييف معايير التوظيف الخاصة بك لضمان عدم استبعاد أي موظفين إماراتيين محتملين لشركتك، إن لم يكونوا متطابقين تماما، فاسمح ببعض القدرة على التكيف. لا تنسإن كنت ملتزما بتطوير مهارات فريقك، فمع مرور الوقت يمكنهم أن يتحلوا بجميع المهارات اللازمة للوظيفة
  • التفاعل مع المجتمعات المحلية: المجتمع المحلي هو المكان الذي ستجد فيه الموظف الإماراتي المناسب لعملك. أثناء تفاعلك مع برامج التوطين، تأكد من أنك تتحدث إلى أشخاص على أرض الواقع، لأن هؤلاء هم الذين يمكن أن يكونوا المرشح التالي لعملك. من خلال تواجدك في قلب المجتمع، ستمنح نفسك الفرصة لتكون في مقدمة أفكارهم كعمل تجاري.

هل ترغب في التحدث إلى شخص ما حول كيفية التكيف مع متطلبات حصة العمال الإماراتيين؟ تواصل معنا على 800 BIZ، أو setup@bizincorp.com

Emirati Workers Quota: How To Adapt Your Business

While the focus has been on the introduction of new taxation laws in Dubai, there was also an announcement that was shared at the same time: the Emirati Workers Quota update. 

The Emirati workers quota requires UAE based companies with 50+ employees to have a minimum number of 2% of Emirati employees in their workforce. 

Here’s everything you need to know about the Emirati Workers quota, and how you can adapt your business to it. 

Emirati Workers Quota

Firstly, the Emirati workers quota isn’t actually a new concept. Companies operating in the banking and finance industry have been required to maintain a quota of 4% Emirati employees, while companies in the insurance industry have been required to maintain a quota of 5%. These rules are subject to the number of employees in the company. 

This used to be a very specific requirement dependent on industry. Now, every business in Dubai that employs over 50 workers will need to have at least 2% of an Emirati workforce. The numbers on that work out at 1 Emirati worker in every 50 employees. 

Workers Quota Dubai

The Emirati workers quota is part of the UAE’s larger Emiratization initiative, which aims to increase the participation of Emirati nationals in the private sector workforce and reduce the country’s reliance on foreign labor. Included in the wider initiatives are support for training and education programmes and financial incentives for companies that hire Emirati nationals, among many others.

While an admirable policy for local Emiratis, this does require an element of adaptation from your business to maintain compliance with the quota. Here’s how to do so. 

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Adapt To Emirati Workers Quota

Here are some ways in which you can stay on the right side of the requirement. 

  • Develop a recruitment strategy:

If you’re on the cusp of meeting the employee count quota, you should be taking steps towards ensuring your next hire(s) put you on the right side of the quota. To do this, ensure your recruitment strategy is positively aiming towards the recruitment of Emiratis.  Aim to attract local Emiratis to your positions by partnering with local schools, colleges, and universities to promote your business and identify potential candidates, offer internships or apprenticeships to Emirati students, and make your business front and center of the Emirati community. 

  • Train and develop your existing employees:

While there is naturally a lot of focus on the hiring element of the quota, focus should also be placed on upskilling your existing Emirati employees to increase the chances of retention. Provide access to education and training courses for your existing employees, offer them the opportunity to enroll in mentoring and coaching programs, and create a growth environment for your employees to work in.

  • Partner with Emiratization programs:

There are dozens of Emiratization programs that provide businesses with access to a pool of qualified Emirati candidates. Partnering with these programs both makes strategic sense, and could open up the opportunity to access special subsidies and grants for training of Emirati workers.

  • Be flexible:

The reality is, with the quota, you may need to be flexible with qualifications and experience levels to fill a position in your company. Adapt your hiring criteria to ensure you don’t shut out any potential Emirati workers for your position, and if they aren’t a perfect match, allow for some adaptability. Don’t forget – if you’re also committed to upskilling your team, you will close any skill gaps in no time. 

  • Engage with local communities:

The local community is where you will find the next Emirati worker for your business. While you’re connecting with Emiratization programs, make sure you’re talking to the people on the ground who could be the next candidate for your business. By starting at the very heart of the community, you will give yourself the chance be at the front of their thoughts as a business. 

Would you like to speak to somebody about how to adapt to the requirements for the Emirati worker’s quota? Reach out to us at 800 BIZ, or setup@bizincorp.com.