Corporate Tax Impact on UAE Economy and SMEs

This year marks a pivotal moment for the UAE as corporate tax becomes a reality, reshaping the economic landscape and impacting SMEs. Businesses earning profits above AED375,000 are now subject to a 9 percent corporate tax rate. While this introduces financial changes, experts anticipate long-term positive effects on the nation’s economy, regulatory infrastructure, and global business reputation.

Insights from UAE Experts

To understand the impact, we spoke with Paul Bryson, Managing Director at Virtuzone, and Maryia Vinahradava, Head of Corporate Services at Virtuzone.

Why Corporate Tax and Its Impact on SMEs

Paul: The UAE government aims to diversify the economy and reduce reliance on traditional markets. The corporate tax scheme can amplify the momentum of non-oil sectors, fostering focus on knowledge and innovation.

Maryia: SMEs benefit from simplified reporting obligations under the new law. Minimal requirements enhance their appeal to investors, domestically and abroad, facilitating operational ease and future investments.

Impact on Visa-Driven Businesses

Paul: Businesses targeting visas are unaffected, falling under the zero revenue category. While exempt from tax, registration and annual filing remain mandatory.

Maryia: Alternatives exist for visa seekers, including the 10-year golden visa for AED2 million deposit or property purchase. Existing property owners can also qualify for the Golden Visa with valuations exceeding AED2 million.

Common Questions and Sentiments

Maryia: Businesses seek guidance on optimizing tax situations, understanding obligations, and potential exemptions. Small Business Relief, offering exemption for revenue below AED3 million, is often overlooked.

Paul: The high revenue threshold benefits small businesses, setting the UAE apart from other countries with higher tax thresholds.

Legal and Compliance Obligations

Maryia: Apart from corporate tax, businesses must address VAT compliance, goAML registration (for certain sectors), and adhere to Economic Substance Regulations (ESR) for maintaining UAE presence. Guildhall’s executive search can help businesses build teams knowledgeable in these compliance areas.

Staying Compliant and Agile in a Dynamic Environment

Paul: The UAE’s evolving regulatory landscape demands expert guidance. Guildhall, as the largest corporate service provider, educates clients on compliance, simplifies transitions, and ensures frictionless adherence to corporate tax, VAT, and other regulatory requirements.