An Overview Of The Corporate Tax Regime Across The GCC Countries

The introduction of corporate tax in the UAE has made the businesses operating in the country assess their scope of compliance and prepare accordingly. Many foreign investors had misgivings about the new form of tax when the news broke out that the UAE corporate tax will come into effect from June 1st, 2023. However, at 9%, the UAE corporate tax rate is the lowest when compared to that of other countries in the Gulf Cooperation Council (GCC).

Investors need not be apprehensive about their businesses as the UAE is still the most competitive among the GCC nations when it comes to taxes. Consult with tax agents in the UAE to gather more information on the corporate tax and prepare for it. Read ahead to have an overview of corporate tax rates across the GCC countries as opposed to the corporate tax rate in the UAE.

Corporate Tax Rate in Qatar

Qatar is one of the richest and most prominent nations in the GCC region that levies corporate tax at the rate of 10%. Businesses wholly or partially owned by foreign entities and earning income from sources in Qatar are taxable in the country. The tax liability of joint ventures in Qatar is dependent upon the percentage of share held by the foreign partner in the joint venture’s profit. Qatar at present doesn’t levy any corporate income tax on entities wholly owned by Qatari nationals and GCC nationals that are resident in Qatar.

Corporate Tax Rate in Oman

The rate of corporate income tax is uniform across all types of business entities in Oman irrespective of whether it is a corporate entity or whether it is registered or not. Oman levies corporate tax at the rate of 15% for all taxpayers other than Omani proprietorships (‘establishments’) and limited liability companies (LLCs) that meet the conditions of small and medium enterprises (SMEs).

Corporate Tax Rate in Saudi Arabia

As per the tax law in Saudi Arabia (effective from July 30, 2004), resident capital companies and non-residents carrying out business activities in the Kingdom through a permanent establishment (PE) are liable for corporate income tax at the rate of 20%. A company will be treated as a resident company if it is established as per the Saudi Companies Regulations, or if its central control and management are located within the Kingdom.

Generally, investors who are not Saudi nationals come within the scope of income tax in Saudi Arabia. However, Zakat is levied on Saudi citizen investors, and GCC countries citizens who are treated as Saudi citizens for Saudi tax purposes. Consult with tax agents in the UAE to compare the tax rates of Saudi and the UAE.

Corporate Tax Regime in Bahrain

The Kingdom of Bahrain at present levies only a limited corporate tax at the rate of 46%. The Bahrain corporate tax only applies to entities carrying out activities such as exploration, production or refining of hydrocarbons. All the other companies engaged in activities other than these attract a corporate tax at the rate of 0%. Furthermore, the Kingdom doesn’t levy taxes on income, sales, capital gains, or estates.

Corporate Tax Rate in Kuwait

Kuwait currently imposes corporate income tax at the rate of 15%. Companies wholly owned by Kuwaiti nationals or other GCC countries are excluded from the scope of corporate income tax in Kuwait. However, GCC companies owned by foreign entities will be subject to corporate tax to the extent of foreign ownership. Kuwait imposes corporate income tax only on profits and capital gains of foreign ‘corporate bodies’ that carry out a business or trade in Kuwait, directly or via agents.

The New Corporate Tax Regime in the UAE

The UAE corporate tax regime is in progress as the Government has not yet promulgated a Cabinet Decision or any Executive Regulations. However, the Ministry of Finance (MoF) has issued a corporate tax consultation document that provides us with relevant information on the UAE corporate tax rates and compliance obligations for businesses.

Right now, businesses can consult with tax agents in the UAE to keep themselves updated about the corporate tax regime in the country. Currently, the UAE corporate tax will be levied on the taxable income of the businesses in the following manner:

  • 0%, for taxable income not exceeding AED 375,000;
  • 9%, for taxable income exceeding AED 375,000

Consult with the Best Tax Agents in Dubai, UAE

The introduction of corporate tax in the UAE is sure to have an impact on the business operations, structures, and future mergers and acquisitions in the country. Tax agents in the UAE such as Jitendra Chartered Accountants encourage businesses to assess their current structures and operations in light of the new tax. We have a team of dedicated tax consultants in the UAE who can support you throughout your corporate tax preparation process.