The UAE's Ministry of Finance has given new details of corporate tax for businesses operating within the country's free zones after the Gulf nation introduced the tariff on June 1.
Companies operating in free zones can pay zero per cent tax on income from certain qualifying activities and transactions, officials from the Ministry of Finance said in Abu Dhabi.
A qualifying company can benefit from zero per cent corporate tax rate on qualifying income provided it is incorporated, established or registered in a free zone.
It can also benefit from a tax exemption on income earned from transactions with mainland UAE businesses or those in a foreign jurisdiction.
Qualifying activities include fund, wealth and investment management services, the manufacture and processing of goods or materials, reinsurance services, the holding of shares and other securities and the ownership, management and operation of ships.
Other qualifying activities include services provided by headquarters to related parties, Treasury and financing services provided to related parties, the financing and leasing of aircraft (including engines and rotable components), logistics services, as well as distributions in or from a designated zone that meet the relevant conditions and any ancillary activities related to these.
Businesses can contact their free zone authority to confirm whether their free zone is eligible for the zero per cent rate.
Asked if the new rules will compel more businesses to move from the mainland to free zones, Shabana Begum, executive director of the tax policies sector, said the laws were designed to further promote the country's attractiveness in strategic sectors.
The corporate tax laws – which levy a headline 9 per cent rate on income of certain businesses that exceed Dh375,000 ($102,000) – reflect the UAE's efforts to pursue non-oil growth, diversify its economy, boost its revenue base and reinvest funds in strategic projects, Younis Al Khoori, undersecretary of the Ministry of Finance, told reporters.
The move to introduce corporate tax will help the Arab world’s second-largest economy broaden its revenue base and achieve its economic growth objectives.
The move will increase the country's taxation scope beyond VAT and different custom duties, as well as complement the government's efforts to diversify its economy from oil, analysts say.
The UAE has about 40 free zones across the country, the Ministry of Economy website says. The zones, where expats and foreign investors benefit from100 per cent ownership of companies, attract billions of dollars of investment for the Middle East's trade hub.
On Thursday, the Ministry of Finance released two new decisions pertaining to corporate tax and companies operating in free zones. Cabinet Decision No. 55 of 2023 explained the scope of qualifying income. Ministerial Decision No. 139 of 2023 addressed qualifying activities and excluded activities.
Qualifying income is defined as income from transactions with other free zone entities, as well as domestic and foreign-sourced income derived from conducting any of the qualifying activities.
This is except for income from excluded activities.
Excluded activities are transactions with natural persons; regulated banking, insurance, financing and certain leasing activities; ownership or use of intellectual property assets and ownership or use of UAE immovable property.
Earning income from excluded activities or earning any other income that is not a qualifying income will result in the free zone company being disqualified from the corporate tax regime, subject to "de minimis requirements", the ministry said.
The de minimis requirements allows a qualifying free zone person to earn a small or incidental amount of non-qualifying income without being disqualified from the free zone corporate tax regime.
The de minimis requirement is met where the non-qualifying revenue earned by a qualifying free zone company does not exceed the lower of either 5 per cent of their total revenue or Dh5 million.
It is calculated by dividing total non-qualifying revenue by total revenue.
The Cabinet decision also clarified that a qualifying free zone company must maintain "adequate substance" in the UAE.
Adequate substance requirements mean that the core-income generating activities of a qualifying company must be performed in the free zone. These activities can be outsourced to a related party or third party located in the free zone.
The Cabinet did not set a minimum level of substance.
Key takeaways
- Companies operating in free zones can benefit from zero per cent tax on income from certain qualifying activities and transactions
- A qualifying company can benefit from zero per cent corporate tax rate on qualifying income provided it is incorporated, established or registered in a free zone
- Qualifying activities include manufacturing; reinsurance services; the holding of shares and other securities; the ownership, management and operation of ships; and fund, wealth and investment management services that are subject to UAE regulatory oversight
- They also include treasury and financing services; financing and leasing of aircraft, including engines and rotable components; and logistics services
- To be subject to the zero per cent tax, the non-qualifying revenue earned by a free zone entity must not exceed the lower of either 5 per cent of their total revenue or Dh5 million
- If the requirements are not met, the free zone entity will not be able to benefit from the free zone corporate tax regime for a minimum period of five years
- Businesses can contact their free zone authority to confirm whether their free zone is eligible for the 0 per cent rate.
Washmen Profile
Date Started: May 2015
Founders: Rami Shaar and Jad Halaoui
Based: Dubai, UAE
Sector: Laundry
Employees: 170
Funding: about $8m
Funders: Addventure, B&Y Partners, Clara Ventures, Cedar Mundi Partners, Henkel Ventures
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
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Director: Joseph Kosinski
Rating: 4/5
Know before you go
- Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
- If you’re driving, make sure your insurance covers Oman.
- By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
- Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
- Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.
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Four%20scenarios%20for%20Ukraine%20war
%3Cp%3E1.%20Protracted%20but%20less%20intense%20war%20(60%25%20likelihood)%3C%2Fp%3E%0A%3Cp%3E2.%20Negotiated%20end%20to%20the%20conflict%20(30%25)%3C%2Fp%3E%0A%3Cp%3E3.%20Russia%20seizes%20more%20territory%20(20%25)%3C%2Fp%3E%0A%3Cp%3E4.%20Ukraine%20pushes%20Russia%20back%20(10%25)%3C%2Fp%3E%0A%3Cp%3E%3Cem%3EForecast%20by%20Economist%20Intelligence%20Unit%3C%2Fem%3E%3C%2Fp%3E%0A
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Cricket World Cup League Two
Oman, UAE, Namibia
Al Amerat, Muscat
Results
Oman beat UAE by five wickets
UAE beat Namibia by eight runs
Namibia beat Oman by 52 runs
UAE beat Namibia by eight wickets
UAE v Oman - abandoned
Oman v Namibia - abandoned
Going grey? A stylist's advice
If you’re going to go grey, a great style, well-cared for hair (in a sleek, classy style, like a bob), and a young spirit and attitude go a long way, says Maria Dowling, founder of the Maria Dowling Salon in Dubai.
It’s easier to go grey from a lighter colour, so you may want to do that first. And this is the time to try a shorter style, she advises. Then a stylist can introduce highlights, start lightening up the roots, and let it fade out. Once it’s entirely grey, a purple shampoo will prevent yellowing.
“Get professional help – there’s no other way to go around it,” she says. “And don’t just let it grow out because that looks really bad. Put effort into it: properly condition, straighten, get regular trims, make sure it’s glossy.”
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Goalkeepers: Masaaki Higashiguchi, Shuichi Gonda, Daniel Schmidt
Defenders: Yuto Nagatomo, Tomoaki Makino, Maya Yoshida, Sho Sasaki, Hiroki Sakai, Sei Muroya, Genta Miura, Takehiro Tomiyasu
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Forwards: Yuya Osako, Takuma Asano, Koya Kitagawa
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Funes Mori (14)
Liverpool 2
Keita (11), Firmino (90 1)
The bio
Favourite vegetable: Broccoli
Favourite food: Seafood
Favourite thing to cook: Duck l'orange
Favourite book: Give and Take by Adam Grant, one of his professors at University of Pennsylvania
Favourite place to travel: Home in Kuwait.
Favourite place in the UAE: Al Qudra lakes
World Cricket League Division 2
In Windhoek, Namibia - Top two teams qualify for the World Cup Qualifier in Zimbabwe, which starts on March 4.
UAE fixtures
Thursday February 8, v Kenya; Friday February 9, v Canada; Sunday February 11, v Nepal; Monday February 12, v Oman; Wednesday February 14, v Namibia; Thursday February 15, final
Most sought after workplace benefits in the UAE
- Flexible work arrangements
- Pension support
- Mental well-being assistance
- Insurance coverage for optical, dental, alternative medicine, cancer screening
- Financial well-being incentives
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Manchester City 0
Wolves 2 (Traore 80', 90 4')
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Dengue%20fever%20symptoms
%3Cul%3E%0A%3Cli%3EHigh%20fever%3C%2Fli%3E%0A%3Cli%3EIntense%20pain%20behind%20your%20eyes%3C%2Fli%3E%0A%3Cli%3ESevere%20headache%3C%2Fli%3E%0A%3Cli%3EMuscle%20and%20joint%20pains%3C%2Fli%3E%0A%3Cli%3ENausea%3C%2Fli%3E%0A%3Cli%3EVomiting%3C%2Fli%3E%0A%3Cli%3ESwollen%20glands%3C%2Fli%3E%0A%3Cli%3ERash%3C%2Fli%3E%0A%3C%2Ful%3E%0A%3Cp%3EIf%20symptoms%20occur%2C%20they%20usually%20last%20for%20two-seven%20days%3C%2Fp%3E%0A
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Director: Saeed Roustaee
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Spare
Profile
Company name: Spare
Started: March 2018
Co-founders: Dalal Alrayes and Saurabh Shah
Based: UAE
Sector: FinTech
Investment: Own savings. Going for first round of fund-raising in March 2019
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Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
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