UAE free zones not fully exempt from first-time corporate tax
The UAE’s June 1 introduction of its first corporate tax will undo some of the fiscal incentives that have prompted foreign businesses to flock to its more than 40 special economic zones (SEZs).
After years of not taxing company profits, the government has launched a 9% levy, in line with the global push towards a level playing field for corporate tax.
It is a step change for all businesses across the Emirates, but it creates particular challenges for businesses in SEZs. Despite their long-standing offer of tax-free holidays for up to five decades, these zones are not fully exempted from the new regime and do not benefit from concessions offered to onshore businesses.
“Being set up in a free zone doesn’t, by default, make you eligible for 0% corporate tax,” says Lokesh Gupta, an associate director at consultancy Nexdigm UAE.
