Tax Agency Number (TAN) 30004113
Corporate Tax in UAE : The Ministry of Finance (MOF) in the United Arab Emirates has announced that federal corporate income tax will be introduced in the UAE on 1 June 2023. This follows an earlier decision by the UAE government not to tax profits of companies and organizations in the UAE, a policy that had historically made the country an attractive destination for foreign investment.
The UAE has announced plans to introduce a flat corporate tax rate across the country in line with international standards. The move, motivated by the UAE's desire to meet international tax standards while minimizing compliance costs for businesses, will shield start-ups and small firms while keeping one of the lowest corporate tax rates in the world.
The United Arab Emirates will institute a corporate tax of 9% on all businesses that generate over 375,000 AED (about USD $100,000) in net revenue in 2023. Businesses that generate less than this sum of money will continue to pay a 0% tax rate.
The UAE has announced that large multinational firms with profits over 750 million euros and profits of more than 750 million dollars will have to pay 15% tax. This amount is in line with the Global Minimum Corporate Tax Rate agreement.
Corporate tax in UAE will take effect for businesses with a tax year beginning on or after 1 June 2023.
Tax accounting is a large subset of the field of accounting. There are several objectives when it comes to accounting for corporate income taxes and optimizing a company’s valuation.
Saif Chartered Accountants offers complete accounting solution for your CT requirements.
We have formed special Corporate Tax desk, who will be serving clients for any service related to Corporate tax in UAE. Our TAX experts provide support to the client right from the beginning.
Tax desk available for Construction, Manufacturing, services, Trading and Retail, Logistics and Hospitality sectors.
We can assist with all aspects of Corporate Tax in UAE, including reviews and planning and updates on any changes that may affect your particular sector.
We can also advise on the best way to treat new areas of trade as your business expands, as it's important to plan mitigation of Tax liabilities in advance.
Corporate Tax is a form of direct tax levied on the net income or profit of corporations and other businesses. Corporate Tax 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 will 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 reaffirms the UAE’s commitment to meeting international standards for tax transparency and preventing harmful tax practices
he UAE CT regime will become effective for financial years starting on or after 1 June 2023
Examples:
The UAE CT is a Federal tax and will therefore apply across all Emirates
UAE CT will apply to all UAE businesses and commercial activities alike, except for the extraction of natural resources, which will remain subject to Emirate level corporate taxation
All activities undertaken by a legal entity will be deemed “business activities” and hence be within the scope of UAE CT
This would generally be done by reference to the individual having (or being required to obtain) a business licence or permit to carry out the relevant commercial, industrial and/or professional activity in the UAE
The CT rates are:
A multinational corporation is a corporation that operates in its home country, as well as in other countries through a foreign subsidiary, branch or other form of presence / registration. Merely earning income from outside its home country without a foreign presence or registration would not make a business a multinational corporation
In the context of the global minimum effective tax rate as proposed under 'Pillar Two' of the OECD Base Erosion and Profit Shifting project,” large” refers to a multinational corporation that has consolidated global revenues in excess of EUR 750m (c. AED 3.15 bn)
UAE CT will not apply on an individual’s salary and other employment income (whether received from the public or private sector)
Business income earned under a commercial license will be within the scope of UAE CT
UAE CT will generally apply to income earned from activities carried out under a freelance license / permit, albeit no CT will be payable unless the annual net income of the freelance professional exceeds AED 375,000.
Interest and other income earned by an individual from bank deposits or saving schemes will not be subject to UAE CT
The CT liability will be calculated as follows:
Free zone businesses will be subject to UAE CT, but the UAE CT regime will continue to honour the CT incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE
A business established in a free zone will be required to register and file a CT return
The UAE CT treatment that will apply to businesses in free zones will be the same across all free zones
Once the VAT implementation starts, the returns should be submitted at the regular periods. The duration for filing is for every quarter of the year.
The registered businesses can file their returns using the online services of the governmental tax related portal. We guide taxpayers to file the value added tax returns too.
The VAT e-filing will be active on the portal of Ministry of Finance. Procedure for filing VAT return in Dubai will be entirely online and no manual returns are accepted by the ministry. The e-services section will offer an option for the VAT return filing. The returns should be filed after every quarter. Delay in filing returns may attract penalties imposed by the tax authorities.
All the registered businesses and individuals should submit the quarterly records of the paid value added tax. Even if you have not paid VAT, you should file the return as Nil if you are a VAT registered company.
The default period for submission of the returns of VAT is 3 months.
The VAT return is nothing but a formal way of reporting the VAT paid during a specific duration. It is to be submitted as per the documents in the record, ledger, and the financial statements.
The main purpose of filing a return is to show the summary of the value added tax to the authorities. Returns are essential for performing auditing by VAT law enforcement activities.
@2022 Saif Chartered Accountants, Dubai, UAE. All rights reserved. | Sharjah Abudhabi DMCC Global