The leading corporate tax consultants in Abu Dhabi, UAE can help companies on the mainland or in the Freezone determine whether they are subjected to tax. Apart from that, they can help businesses to prepare the necessary financial records and documents, understand how free zone companies are taxed, comprehend the tax rates, and understand how to treat related party and connected person transactions, withholding tax, and allowable expenses.
Understanding the corporate tax regulations in the UAE will help organisations ensure compliance and avoid any fines and penalties. Compliance with UAE corporate tax laws will also assist businesses to avoid hefty fines and preserve their credibility, shareholders' confidence, and openness.
Companies that comply with UAE corporate taxes not only help you prevent penalties but are also more likely to maintain their reputation, trust, and transparency among their other shareholders and investors.
If a company is unsure if it is exempt from the corporate tax regime, it can check with corporate tax advisors in the UAE. The following individuals are exempted from company taxation in the UAE:
As a part of the corporate tax registration process in the UAE, companies that are subject to the tax will be required to apply with the Federal Tax Authority (FTA) for registration as corporate taxpayers. Additionally, they must get a tax registration number within a certain period. Whenever a company ceases to be subject to corporate tax, it must apply to the UAE for the deregistration of the corporation. In order to apply, the cessation or liquidation must have taken place within three months. Businesses could get help from corporate tax advisors in Dubai with tax registration and deregistration.
A company is only required to complete and submit one UAE corporate tax return, including any necessary supporting schedules, to the FTA for each tax period. Businesses won't need to submit a provisional Corporate Tax Return or pay their corporate tax in advance in the UAE. For further information on administrative needs, consult with Corporate tax advisers in the UAE.
GAAP Associates offers services such as corporate tax registration with the FTA, tax return filing, calculating corporate taxable income, tax registration number deregistration, tax assessment, and tax advisory. Our highly skilled chartered accountants and tax advisors can assist businesses in ensuring tax compliance.
CT is a form of direct tax levied on the net income or profit of corporations and other businesses. CT is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions.
A competitive CT regime based on international best practices is expected to cement the UAE’s position as a leading global hub for business and investment and accelerate the UAE’s development and transformation to achieve its strategic objectives.
Introducing a CT regime also reaffirms the UAE’s commitment to meeting international standards for tax transparency and preventing harmful tax practices.
Corporate Tax will be levied at a headline rate of 9% on Taxable Income exceeding AED 375,000. Taxable Income below this threshold will be subject to a 0% rate of Corporate Tax
The UAE CT regime will become effective for financial years starting on or after 1 June 2023.
Examples:
● A business that has a financial year starting on 1 July 2023 and ending on 30 June 2024 will become subject to UAE CT from 1 July 2023 (which is the beginning of the first financial year that starts on or after 1 June 2023)
● A business that has a financial year starting on 1 January 2023 and ending on 31 December 2023 will become subject to UAE CT from 1 January 2024 (which is the beginning of the first financial year that starts on or after 1 June 2023)
UAE CT applies to juridical persons incorporated in the UAE and juridical persons effectively managed and controlled in the UAE, as well as to foreign juridical persons that have a permanent establishment (see section Foreign persons) in the UAE (see question ‘Who is considered a resident for UAE CT purposes?’ under section Scope and rate).
Individuals will be subject to CT only if they are engaged in a business or business activity in the UAE, either directly or through an unincorporated partnership or sole proprietorship. A Cabinet Decision will be issued in due course specifying further information on what would bring a natural person within the scope of UAE CT.
Yes – the UAE CT does not differentiate between nationality or residence. Juridical persons that are incorporated or resident in the UAE, or that have a permanent establishment in the UAE, will be subject to UAE CT. This applies irrespective of the residence and nationality of the individual founders or (ultimate) owners of the entity.
Yes. The UAE CT is a Federal tax and will therefore apply across all the Emirates.
Businesses engaged in the extraction of the UAE’s natural resources and in certain non-extractive activities that are subject to Emirate-level taxation will be outside the scope of UAE CT, subject to meeting certain conditions. Other businesses may be subject to both CT and Emirate-level taxation. Emirate-level taxes paid will not be able to be credited against or otherwise reduce the amount of CT payable.
No, CT and VAT are two different types of taxes. Both will continue to apply in the UAE.
If you are a registered business for VAT, you will have to pay VAT and CT separately. If your business is not VAT registered you may still have to pay CT.
In-force International agreements (including international agreements for the avoidance of double taxation) to which the UAE is a party should be considered under the UAE CT regime. In case of a conflict between the Corporate Tax Law and an international agreement with respect to the right to tax a certain item of income, the relevant international agreement may limit the application of UAE CT.
No, CT and Excise Tax are two different types of taxes. Both will continue to apply in the UAE.
To assess what the UAE CT regime means for your business, as a starting point, you should:
1. Read the Corporate Tax Law and the supporting information available on the websites of the Ministry of Finance and the Federal Tax Authority.
2. Use the available information to determine whether your business will be subject to UAE CT and if so, from what date.
3. Understand the requirements for your business under the Corporate Tax Law, including, for example:
a. Whether your business needs to register for UAE CT.
b. What is the accounting / Tax Period for your business?
c. By when your business would need to file a UAE CT return?
d. What elections or applications can or should your business make for UAE CT purposes?
e. How UAE CT may impact your business’ obligations and liabilities under contracts with customers and suppliers.
f. What financial information and records your business will need to keep for UAE CT purposes?
4. Regularly check the websites of the Ministry of Finance and the Federal Tax Authority for further information and guidance on the UAE CT regime.