The UAE’s new corporate tax, which will be implemented from June 1, 2023, will bring more transparency to the market around financial disclosures, according to the CEO of KPMG Lower Gulf.

In an exclusive interview with Zawya, Emilio Pera said that KPMG had seen significant interest from entities that operate across free zones and mainland jurisdictions, as well as multinationals that have business inside and outside of the UAE.

Emilio Pera, CEO, Senior Partner, KPMG Lower Gulf. Image Courtesy: KPMG
Emilio Pera, CEO, Senior Partner, KPMG Lower Gulf. Image Courtesy: KPMG
Emilio Pera, CEO, Senior Partner, KPMG Lower Gulf. Image Courtesy: KPMG

Under the tax programme, corporations and other businesses with taxable profits exceeding AED 375,000 ($102,110) will have to pay a standard rate of 9%. The first year the tax will be effective is in 2024, meaning the first assessments will take place in 2025.

“If you consider the 9% proposed tax it is one of the lowest internationally, but it’s also providing transparency in the market, and positions the UAE as a leading financial centre in providing that confidence,” Pera said.  

The different segments entitled to pay corporate tax include: UAE-incorporated entities; individuals (foreign or resident) who conduct a business or business activity in the UAE; and foreign legal entities that have a permanent establishment in the UAE or that are managed and controlled in the UAE.

There has already been an uptick in the requirements of companies from a skills perspective, Pera said, as when VAT was implemented in the UAE, it was largely resolved under companies’ finance functions, whereas now, independent tax functions are being established.

“From a professional services perspective, it’s an area that we see growth in our tax business, but also advisory business, in order to support clients from a structural perspective, and also on the audit side,” he said.

Companies need to start looking from a deferred tax perspective, what the implications could be, he added.

In terms of readiness, KPMG is seeing awareness and interest from larger organisations, from companies that have been operating in a regional or international environment, who have already been exposed to tax jurisdictions, and around the nuance of mainland and offshore jurisdictions within the UAE.

“As far as readiness, I believe there is sufficient time, we have significant interest from companies. I can’t say that there aren’t some companies that might wake up a little bit later. That’s inevitable, that there will be some companies that will come forward nearer the time,” he said.

(Reporting by Imogen Lillywhite; editing by Seban Scaria)