The fiscal benefits of UAE’s corporate tax will be constrained by the larger free zones that are exempted from the tax on their non-oil economy. The introduction of the corporate tax is one of the most significant since 2018 when the first VAT was introduced in Dubai.
The new tax will broaden the revenue for the federal government and also allow the individuals to emirate with the recent approach of distribution of VAT receipts. These vat receipts are considered as a new source of income which is increasing the revenue generated to license fees, service fees, and land sales.
The new tax reforms will not be applied in the free zones of UAE’s non-oil economy. The UAE Government has introduced the tax on business profits starting from June 2023 it is nine percent. The UAE and other countries that produce oil are looking for ways to make their economies more reliant and focusing on diversifying their revenue streams and resources.
The analysts and tax experts have estimated the new corporate tax will generate $25 billion and there will be more additional revenue annually. The corporate tax regime will showcase the government’s efforts to ensure that UAE complies and leads to global tax developments that are competitive and benefit the economy.
The domestic UAE companies with negative credit and the impact on large corporations would be muted because of the free zones due to some factors that lead to the increased price, high-cost structures, and huge dividends. If you are looking to set up a business in free zones, FlyingColour can help you with each step of the way and tax exemptions can benefit you in the long run.
In the UAE Free zones, foreign companies can operate with light regulation also they have the leverage of owning 100% ownership in companies. The introduction of the corporate tax is one of the significant decisions taken since 2018.
Earlier, in Oman, the GCC had corporate tax only applied to the business that is owned by citizens and foreigners. The major GCC nations tend to impose a corporate tax on foreign companies. The free zone companies tend to retain a major amount of benefits with the exemption of corporate tax. There will be enormous financial benefits that will help the UAE economy to flourish at a faster rate than before.
The highly competitive business and start-ups are emerging and growing at a faster rate in freezones with the FlyingColour Business Setup Services. If you wish to set up a business in Freezone or Mainland contact our team of experts.