A Guide to the General Definitions under the UAE Corporate Tax Law
The UAE issued the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the “Corporate Tax Law”) on 9th December 2022. The UAE Corporate Tax Law provides the basis for the implementation of the Federal Corporate Tax in the country, which will be effective for financial years starting on or after June 1st 2023.
Reading and understanding each provision in the UAE Corporate Tax Law is essential for businesses to prepare for and comply with the corporate tax effectively. This can be a challenging task but corporate tax consultants in Dubai can help you understand the provisions of the law. In this blog, we will walk you through the definitions of the key terms and phrases as stated in Article 1 of the UAE Corporate Tax Law. However, businesses need to wait for the release of the Executive Regulations to make any corporate tax decision. Keep reading for further insights:
Corporate Tax is the tax imposed as per the UAE Corporate Tax Law on juridical persons and Business income.
The UAE Federal Tax Authority (FTA) is the Authority for corporate tax. Consultants offering corporate tax advisory in Dubai can help you deal with the FTA.
The UAE Corporate Tax Law defines a Taxable Person as a person subject to Corporate Tax in the State under the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The UAE Corporate Tax Law defines the State as the United Arab Emirates (UAE).
The income that is subject to corporate tax under the UAE Corporate Tax Law is taxable income. Corporate tax advisers in Dubai can help you to calculate your taxable income.
Any juridical person that is wholly owned and controlled directly or indirectly by a Government Entity is defined as a Government Controlled Entity.
A mandated activity is any activity carried out by a Government Controlled Entity as per the legal instrument establishing or regulating the entity.
Financial Year is the period specified in Article 57 of the UAE Corporate Tax Law. As per Article 57, “A Taxable Person’s Tax Period is the Financial Year or part thereof for which a Tax Return is required to be filed.” The Financial Year of a Taxable Person is the Gregorian calendar year or the 12-month period for which the Taxable Person prepares financial statements. If you are searching for how to determine the Financial Year for Corporate Tax, consult with tax agents in Dubai.
A tax return is an information submitted to the FTA along with any schedule or attachment for the purpose of Corporate Tax. Corporate tax advisers in Dubai can help you file corporate tax returns promptly.
A tax period is a period in which the tax returns need to be filed with the FTA.
A free zone is a designated and defined geographic area within the UAE as per the decision issued by the Cabinet at the suggestion of the Ministry of Finance.
Free Zone Person
A free zone person refers to a juridical person incorporated, established or otherwise registered in a Free Zone. It may also include a branch of a Non-Resident Person registered in a Free Zone.
Corporate Tax Payable
Corporate Tax Payable is the Corporate Tax that is due for payment to the FTA in respect of one or more Tax Periods.
A tax group refers to two or more Taxable Persons treated as a single Taxable Person as per Article 40 of the UAE Corporate Tax Law.
Tax Registration is the process where a person registers for Corporate Tax with the FTA.
Tax Registration Number
This is a unique number issued by the FTA to each Person who registers for corporate tax in the UAE.
This is the process where a Person deregisters for Corporate Tax purposes with the FTA.
The Withholding Tax refers to the Corporate Tax that is withheld from the UAE-sourced income.
Withholding Tax Credit
Withholding Tax Credit is the Corporate Tax amount that can be deducted from the Corporate Tax due to be paid to the FTA.
Tax loss refers to any negative Taxable Income as calculated under the UAE Corporate Tax Law.
Foreign Tax Credit
A Foreign Tax Credit is the tax paid under the laws of a foreign jurisdiction on income or profits that may be deducted from the Corporate Tax due.
Revenue refers to the gross amount of income derived during a Tax Period.
Tax Procedures Law
Tax Procedures Law refers to the federal law governing tax procedures in the UAE.
Administrative Penalties are the amounts imposed and collected as per the UAE Corporate Tax Law or the Tax Procedures Law.
A Permanent Establishment is defined as the place of Business or other forms of presence in the State of a Non-Resident Person.
Foreign Permanent Establishment
This refers to the place of Business or other forms of a presence outside the UAE of a Resident Person.
Corporate Tax Consultants in Dubai can Offer More Insights
We have listed here a Glossary of the key terms and phrases that may help you prepare for the UAE Corporate Tax. For a better understanding, you can consult with the best corporate tax advisers in Dubai such as Jitendra Chartered Accountants (JCA). Our corporate tax consulting services in Dubai include CT Assessment & Advisory Services (one-time or retainer basis), CT Compliance Services & CT Agent Services to Represent to Federal Tax Authority (FTA) of UAE in case of any notices served by FTA. Ensure corporate tax compliance and avoid relevant penalties by availing of JCA’s corporate tax services in Dubai, UAE. Talk to our consultants for tax solutions that you can count on.