Introduction
With the implementation of the UAE’s new corporate tax law, many companies face the challenge of navigating unfamiliar regulations and procedures. Our team of experienced tax experts is here to assist you in understanding the implications of corporate tax for your business, maximizing tax exemptions and reliefs, and ensuring timely compliance to avoid penalties.
Our comprehensive services encompass the entire corporate tax lifecycle, from registering your business for corporate tax and adhering to accounting standards to filing your corporate tax submission. We are committed to guiding you through each step seamlessly, ensuring an efficient and cost-effective process.
Must Know
In the United Arab Emirates, effective from June 2023, all businesses must adhere to the newly implemented corporate tax scheme by taking the following three steps:
- Businesses must register for corporate tax through the Federal Tax Authority’s online portal.
- Businesses are required to maintain accounting records that meet the specified reporting standards, such as IFRS (International Financial Reporting Standards).
- Businesses must file their corporate tax submissions with the Federal Tax Authority within the prescribed deadlines.
While not all businesses are subject to corporate tax payments, all businesses are mandated to register and follow these steps to determine their eligibility for tax exemptions.
Our UAE Corporate TAX Services
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Corporate TAX Service
Our experienced professionals will provide comprehensive guidance on all corporate tax considerations relevant to your business operations. This includes identifying potential tax exemptions applicable to your business and strategies for effectively utilizing these benefits. -
Corporate TAX Registration
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Corporate TAX Return
Our experienced team will thoroughly evaluate your corporate tax position, meticulously plan the most favorable tax strategy for your business, and diligently manage all necessary submissions to the FTA throughout the year.
What is Corporate Tax UAE?
The United Arab Emirates (UAE) introduced a new corporate tax regime effective June 1, 2023. Most companies will be subject to the total corporate tax rate of 9% by January 1, 2024. The tax is levied on the taxable income (net profit) of business establishments resident in the UAE.
Background of Corporate Tax UAE
The UAE has long been a magnet for entrepreneurs and investors from around the world, offering a compelling combination of political stability, strategic location, world-class infrastructure, and a favorable tax regime. With its fifth-largest economy in the Middle East, the UAE has successfully diversified its revenue streams beyond oil and natural resources, positioning itself for continued growth and prosperity.
Is Corporate Tax the Same as VAT?
The introduction of corporate tax in the UAE sparked misconceptions among businesses, often equating it to Value Added Tax (VAT). However, these two taxes are fundamentally distinct.
Unlike VAT, which applies to companies only after reaching specific thresholds, corporate tax is mandatory for all businesses in the UAE.
VAT is a consumption tax borne by customers at the point of purchase, while corporate tax is levied on a company’s taxable income.
Companies are responsible for paying corporate tax on their annual net profits. Conversely, businesses collect VAT from customers when selling goods or services and subsequently remit it to the government.
Corporate tax is calculated directly on a company’s net income, excluding total revenue or sales volume, and is paid directly to the government.
Who Will Be Subject to Corporate Tax UAE?
Under the newly implemented corporate tax regime, all commercial activities conducted within the UAE, including those of free zone companies, are subject to taxation, with a few specific exemptions.
The UAE Ministry of Finance (MOF) has outlined the entities liable to pay corporate tax as follows:
- Corporations and legal entities established in the UAE or with their primary management and operations within the UAE.
- Individuals conducting business or business activities within the UAE’s jurisdiction.
- Foreign legal entities maintaining a Permanent Establishment (PE) in the UAE, as defined in Section 8 of the Corporate Tax Law.
The applicability of the new tax regime commenced on June 1, 2023. Businesses with financial years commencing on July 1, 2023, will commence tax calculations from 1st July 2023. Businesses with financial years commencing on January 1, 2024, will commence their tax calculations from January 1, 2024.
Except for specific exemptions, all business entities conducting commercial activities within the UAE are required to register and file corporate tax returns.
How much Is the Corporate Tax UAE?
The UAE’s Ministry of Finance (MOF), the regulatory body for corporate taxes, has implemented a three-tier taxation system:
Businesses with annual net profits of up to AED 375,000 will incur a 0% tax rate.
Businesses with annual net profits exceeding AED 375,000 will be subject to a 9% tax rate.
Multinational corporations with global revenue surpassing EUR 750 million (equivalent to AED 3.15 billion) will be subject to a minimum corporate tax rate of 15%. This aligns with Pillar Two of the OECD Base Erosion and Profit Shifting (BEPS) Project, which aims to ensure that large multinational enterprises pay their fair share of taxes.
Corporate Tax Registration
To register for Corporate Tax in the UAE,
- Visit the Federal Tax Authority’s (FTA) website and complete the necessary forms, accompanied by the required documentation.
- The documentation includes the entity’s Emirates ID, trade license, passport, financial records, details of business activities, and corporate structure.
- Upon submission, the authorities will review the application and, if approved, issue a tax registration number (TRN) to the company, indicating their official registration.
- Approvals typically take 20 days; however, if additional information is requested, the process may be extended by another 20 days.
- CA Chartered Accountants LLC is here to assist you with your application through the FTA.