CORPORATE TAX IN UAE
Are you ready for UAE Corporate Tax?
Are you ready for UAE Corporate Tax?
Registration for Corporate Tax in UAE has been started. Hiring the best corporate tax consultants in Dubai, UAE for tax advisory services has become the need of the hour as businesses need to be registered for Corporate Tax.
Even though the UAE Corporate Tax Law is yet to be finalised, the Ministry of Finance (MoF) has issued relevant guidelines and a consultation document to help businesses to start their preparations. Understanding the gravity of the situation, leading chartered accountants firms in Dubai such as Jitendra Chartered Accountants (JCA) start offering corporate tax services. JCA offers robust advisory on assessing the compliance requirements of the businesses.
By signing up with the top corporate tax consultants in the UAE, companies in the mainland and Freezone, can get assessed whether or not they fall within the scope of the tax, prepare the relevant documents and financial records, and how free zone companies will be taxed, understand the applicable tax rates, and know about exempted income, carry forward of losses, treatment of related party (group companies) and connected person transactions, withholding tax, allowable expenses, the cap on the interest, foreign tax credit, tax group formation, and other key requirements including tax payments, tax return filing and audit of financial statements. Getting to know the corporate tax requirements in the UAE will help businesses to ensure compliance and avoid relevant penalties and consequences. Complying with corporate tax in the UAE would also help companies to avoid significant penalties and maintain their reputation, trust and transparency amongst their investors and shareholders.
The rate of corporate tax in the UAE is one of the most competitive tax rates in the Middle East. Availing of corporate tax advisory services in Dubai will help entrepreneurs to understand the rate of corporate tax applicable to their business model. The UAE corporate tax will be levied on the annual taxable income of businesses in the following manner:
Businesses can consult with corporate tax consultants in the UAE to verify whether they are exempted from the scope of the corporate tax regime. The following persons are exempted from the UAE corporate tax regime:
A legal entity incorporated in the UAE will be considered a resident as per corporate tax law in the UAE. Foreign companies will be treated as residents under the UAE corporate tax law if it is effectively managed and controlled in the UAE. A company will be considered effectively managed and controlled in the UAE if its decision-makers or directors make the key management and commercial decisions in the UAE. Talk to our corporate tax advisors in Dubai to determine the residence/non-residence status.
Non-residents will be subject to corporate tax in the UAE on,
The following types of income are exempted from the UAE corporate tax regime. However, it is recommended to consult with corporate tax consultants in Dubai before making any tax-related decisions:
Businesses that are subject to tax will be required to apply for corporate tax registration in the UAE with the Federal Tax Authority (FTA). They should also obtain a Tax Registration Number within a prescribed period. Businesses that cease to be subject to the corporate tax must apply for corporate tax deregistration in the UAE. The application should be filed within three months from the date of cessation or liquidation. Corporate tax consultants in Dubai can assist businesses with tax registration and deregistration.
Both Natural Persons and Legal Persons will fall within the scope of corporate tax in the UAE. Natural persons who will be subject to the corporate tax regime include sole establishments or proprietorships and individual partners in an unincorporated partnership who carry out business or commercial activity in the UAE. However, there will not be a parallel tax on the income of natural persons or individuals.
Legal Persons include the UAE companies and other types of legal persons incorporated in the UAE. Foreign Legal Persons having a permanent establishment in the UAE or earning income in the UAE will also fall within the scope of corporate tax. Legal Persons who are subject to the UAE corporate tax regime include Limited Liability Companies (LLC), Private Shareholding Companies (PSC), Public Joint Stock Companies(PJSC), and entities established under the laws of UAE laws that have separate legal personalities. Businesses can seek the advice of corporate tax consultants in Dubai to assess the applicability of corporate tax on their profits.
Free zone persons, which means the companies and their branches registered in a UAE free zone, will fall within the scope of corporate tax. Such free zone businesses will be required to meet corporate tax filing requirements in the UAE. However, a free zone business can continue to receive tax incentives if it complies with all the regulatory requirements. Free zone companies can avail of corporate tax services in Dubai to check if they can receive tax incentives.
Meanwhile, the following conditions are also applicable in terms of corporate tax on UAE free zone businesses:
A free zone person can enjoy a 0% corporate tax rate on income earned from transactions with businesses located outside of the UAE
Taxable income under the UAE corporate tax law will be calculated by using the accounting net profit (or loss) position in the financial statements. IFRS standards will form the basis of corporate tax assessment. However, the UAE corporate tax law will permit businesses to use alternative financial reporting standards to determine the taxable income, which is expected to accommodate and reduce compliance costs for taxpayers such as start-ups and SMEs. Hiring the best corporate tax advisors in the UAE is advisable to determine taxable income accurately.
A UAE resident group of companies can form a corporate tax group. It will be treated as a single taxable person provided the parent company holds at least 95% of the share capital and voting rights of its subsidiaries. However, neither the parent company nor any of its subsidiaries should be an exempt person or a Free Zone Person that benefits from the 0% CT rate. Furthermore, all the members of the group should use the same financial year. Corporate tax advisors in Dubai can help companies to form a tax group.
A business is required to prepare and file only one UAE corporate tax return and other related supporting schedules with the FTA for each tax period. Businesses will not be required to file a provisional Corporate Tax return in the UAE and make advance corporate tax payments. Consult with corporate tax advisors in Dubai to know further about the administrative requirements. Furthermore, businesses need to adhere to the following conditions:
The table below illustrates the CT filing deadlines for businesses with financial year ends of 31 March, 30 June and 31 December:
|Financial year-end 30 June
|First Tax Period 1 July 2023 – 30 June 2024
|Financial year-end 31 December
|1 January 2024 – 31 December 2024
|Financial year-end 31 March
|1 April 2024 – 31 March 2025
The introduction of corporate tax in the UAE will likely transform the country’s regulatory landscape, which means companies must be fully prepared to comply with the new form of taxation. Corporate tax consultants in Dubai such as Jitendra Chartered Accountants (JCA) can help companies to prepare for corporate tax by offering tax assessment and tax advisory services. Specifically, JCA offers the following corporate tax services in Dubai, UAE:
JCA has a team of highly qualified Chartered Accountants and tax agents in the UAE who can help the companies to ensure tax compliance. We have successfully assisted thousands of companies in complying with Value Added Tax (VAT) and Excise Tax and our impeccable track record will come in handy for businesses to meet the requirements related to corporate tax in the UAE.