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Will Corporate Tax in UAE affect your salary?

The UAE is expected to impose corporate tax starting on June 1, but will this also affect employees’ salaries?

Under the provisions of the Corporate Tax Law, corporate tax will not be applied to salaries or other personal income from employment, whether it is earned from work in the government, semi-governmental or private sector.

Interest and other personal income earned from bank deposits or savings programmes are also not subject to Corporate Tax, as well as investment in real estate by individuals in their personal capacity.

The Ministry of Finance reiterated that corporate tax will be set at 9 percent for taxable business profits that exceed Dh375,000. Business with profits at Dh375,00 or less will not be taxed as part of the UAE’s support for small businesses and start-ups.

Businesses exempt from corporate tax include those engaged in natural resource extraction. However, they remain subject to existing local emirate-level taxation.

Government entities, pension funds, investment funds and public benefit organisations are also exempted from corporate tax. Existing free zone entities will also be eligible for 0 percent corporate tax rate on qualifying income.

Additionally, the Corporate Tax regime provides generous relief for intra-group transfers and restructurings, and allows group companies to use each other’s available tax losses.

The Federal Tax Authority will be responsible for the administration, collection, and enforcement of the Corporate Tax Law. ICA/Expat Media

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