DUBAI, (Reuters) – The United Arab Emirates will implement a federal corporate income tax starting on June 1, 2023. This was the Finance Ministry’s announcement on Monday. But, they kept a low base in order to keep it attractive to businesses.

WAM reported in a ministry statement that the tax will apply to all businesses and commercial activities throughout the country. Excerpt of natural resource extraction will not be subject to the new tax.

This is a natural step by the oil producer to diversify revenue sources away from oil revenues.

UAE introduced a value added tax at a rate of 5% in 2018 on many goods and services.

According to the ministry, this new tax regime will include a standard statutory rate of 9% and a 0% rate on taxable profits above 375,000 dirhams (102,107.50), in an effort to help small businesses as well as startups.

It said that businesses in UAE, which is a financial center, do not have to pay taxes on dividends and capital gains.

New programme did not remove exemptions for individuals from income taxes, capital gains tax and real estate tax as well as other earned earnings, which aren’t from businesses.

Ministry said that the UAE’s corporate tax regime will honour any corporate tax incentives that are currently offered to companies in the free zone that adhere to all regulations and do not trade with the UAE mainland.

($1 = 3.6726 UAE dirham)