Click to go back to country list
Corporate Tax Rate Survey 2006 23
80 United Arab Emirates (2006 rate = 20%/55%) The UAE consists of seven Emirates - Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Qaiwain, Fujairah, Ras Al Khaimah. At a Federal level there are no corporate income taxes, but some Emirates have issued their own income tax decrees. Although, in theory, these Emirate level decrees impose tax on the income of all corporate entities, in practice, tax is currently only enforced on foreign oil companies and branches of foreign banks. There is no guarantee, however, that this will remain the case. Foreign Oil Companies: Corporate income tax is imposed on foreign oil companies, i.e. companies dealing in oil or oil rights, including crude oil or other hydrocarbon materials produced in the Emirate. Although the tax rate applicable to oil companies is generally 55 percent of operating profits, the amount of tax actually paid by the oil companies is calculated on the basis of a rate agreed in individual concessions by the company and the respective Emirate. This can range between 55 and 85 percent. Foreign Banks: Branches of foreign banks are taxed at 20 percent of their taxable income in the Emirates of Abu Dhabi, Dubai, Sharjah and Fujairah. The basis of taxation does not differ significantly between the Emirates. Dubai, Sharjah and Fujairah have issued specific tax legislation for branches of foreign banks. Abu Dhabi does not have a specific decree for banks. Municipal taxes are charged in some of the Emirates. In Dubai a 10 percent municipal tax is charged on hotel revenues (usually passed on to the consumer as a service charge). Income from renting commercial premises is taxed at a rate of 10 percent, and from renting residential premises at a rate of five percent. Abu Dhabi does not levy a municipality tax on rented premises, but landlords are required to pay certain annual license fees (which they may or may not pass on to the tenant).
81 United Kingdom (2006 rate = 30%) A nil rate band (the ‘starting rate’) applies to companies with taxable profits up to GBP 10,000, with marginal relief up to GBP 50,000. Companies with profits between GBP 50,000 and GBP 300,000 pay tax at a 19 percent small companies’ rate, with marginal relief up to GBP 1,500,000. Companies with profits of GBP 1,500,000 or more pay tax at the full rate of 30 percent. All these limits are reduced where there are associated companies. Since 1 April 2004, profits distributed to non-corporate shareholders have been charged at a minimum rate of 19 percent, even where they would otherwise be taxed at a lower rate. From 1 April 2006 the starting rate band and the special rules for non-corporate shareholders are to be abolished and the 19 percent small companies’ rate will apply to all profits up to £300,000.
82 United States (2006 rate = 40%) The highest marginal federal corporate income tax rate is 35 percent. State and local governments may also impose income taxes at rates ranging from less than one percent to 12 percent. A corporation may deduct its state and local income tax expense when computing its federal taxable income, generally resulting in a net effective rate of approximately 40 percent. The effective rate may vary significantly, depending on the locality in which a corporation conducts business.
© 2006 KPMG International. KPMG International is a Swiss cooperative of which all KPMG firms are members. KPMG International provides no services to clients. Each member firm is a separate and independent legal entity and each describes itself as such. All rights reserved.