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On 31 January 2022, the UAE Ministry of Finance announced that effective 1 June 2023, Corporate Tax (CT) will be applied on all taxable company profits across the Emirates, with the Federal Tax Authority responsible for the administration and compliance for this new tax regime.
The move has been designed as part of the UAE’s commitment to avoid tax avoidance and tax evasion by global organisations, and follows off the back of the Value Added Tax (VAT) regime which was implemented in 2018.
CT will be payable based on profits reported in financial statements prepared in accordance with internationally acceptable accounting standards with minimal adjustments.
• If the net profit of the business is more than AED 375,000, there will be a standard statutory tax rate of 9 percent.
• If the net profit is AED 375,000 or less, a 0 percent tax rate will apply. This is designed to support small businesses and start-ups and reduce their administrative burdens.
No CT will apply on personal income from employment, income from real estate and other investments, investment returns and other income earned by individuals in their personal capacity that is not related to UAE trade or business. UAE CT will also not apply to dividends, capital gains and other investment returns earned by foreign investors.
Company set ups in the Free Zones will continue to enjoy a tax-free environment provided that they do not conduct business with mainland UAE and comply with all regulatory requirements. However, businesses established in a Free Zone will still be required to register and file a CT return.
As most businesses have a calendar financial year of 1 January – 31 December, the majority of UAE businesses should only become subject to UAE CT from 1 January 2024 onwards.
Sanctuary are here to assist you with advice around the impact CT will have on your business, as well as to provide a detailed analysis of the legalisation as it becomes available. Sanctuary also have a highly experienced team of tax and accounting specialists, who can assist with the implementation of your companies CT filings, preparing and submission of applications, as well as provide on-going tax and accounting support.
For UK businesses considering opportunities in Saudi Arabia, the following steps outline the overall process:
1. Business Activity: Determine the appropriate business activity which will aligns with your business and satisfies all undertakings you will engage with in the Kingdom.
2. Local Partnerships: Consider any potential opportunities for collaborations with established local businesses to ease market entry and meet regulatory requirements.
3. Documentation: Gather the required documentation for incorporation in KSA.
4. Company Registration: Work with experts and the relevant governing bodies to assist with the incorporation process, ensuring compliance with local laws and regulations.
5. Other Requirements: Consider any other requirements for establishing in Saudi Arabia such as capital and tax requirements.
Saudi Arabia's Vision 2030 represents a significant opportunity for UK businesses to engage with an expanding market with vast potential. As the Kingdom continues to diversify its economy and expand its global influence, UK companies are well-positioned to support and benefit from this transformation. With the right strategy, partnerships, and local support, there are a wealth of possibilities.
By aligning your business with Saudi Arabia’s Vision 2030, the benefits for UK and international businesses looking to Saudi Arabia have never been greater.
At Sanctuary, we specialise in assisting businesses looking to expand into Saudi Arabia. We help navigate the complexities of the Saudi market, ensuring that you have the expertise needed to best prepare for success, so get in touch today.
Our expert team offers comprehensive support across a range of services, from company registration, advisory services, and more. Explore our services to discover how we can help you.
Vision 2030 is a strategic framework designed to diversify Saudi Arabia’s economy, reduce its dependency on oil, and transform the Kingdom into a global business hub.
Key points include economic diversification, social reforms, investment in technology and infrastructure, sustainability, and creating a competitive workforce.
The main focus of the Saudi Arabian Vision 2030 strategy is to build on key economic sectors such as hospitality, travel and tourism and build economic stability and sustainability.
Saudi Arabia’s Vision 2030 initiative is aimed at diversifying its economy through strategic investments into the non-oil sector and ensuring a more sustainable economic future.
Saudi Arabia has committed over $500 billion to Vision 2030, funding projects that span a variety of sectors, including energy, tourism, and infrastructure.
Yes, with its growing economy, reform initiatives, and investment incentives, Saudi Arabia is a highly attractive destination for foreign businesses seeking growth opportunities.
Key growing industries include renewable energy, tourism, healthcare, technology, and education.
Saudi Arabia permits foreign owned businesses and investment into the Kingdom, which has been elevated by the Vision 2030 initiative. A MISA licence is required for foreign investors or businesses to establish.
As a result of the diversification efforts of Saudi Vision 2030, the non-oil and private sector in the Kingdom have witnessed unprecedented growth in the past few years. The private sector continues to grow each quarter and the non-oil sectors continue to reach record contributions for the Kingdom’s GDP.
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