Are you ready for UAE Corporate Tax
Corporate Tax is a form of direct tax levied on the net income of
businesses. Corporate Tax is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax.
Registration for Corporate Tax in UAE has been started. Companies need to register for UAE Corporate Tax. so it’s crucial to hire expert corporate tax consultants.
Corporate Tax In The UAE
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Who is subject to Corporate Tax?
Broadly, Corporate Tax applies to the following “Taxable Persons”:
1. UAE companies and other juridical persons.
2. Natural Persons (individuals) who conduct a business.
3. Foreign legal entities with a presence in the UAE are non-resident juridical persons.
UAE Free Zone are also within the scope of Corporate Tax as “Taxable Persons”. Qualifying Free Zone Person can enjoy a Corporate Tax rate of 0% on their qualifying income. Other income 9%.
Income qualifies as defined in a cabinet decision based on the Minister’s recommendation.
Taxable Person
Resident Person
A juridical person that is incorporated or otherwise including a Freezone Person.
A juridical person that is incorporated under a foreign jurisdiction that is managed and controlled in UAE.
A natural person who conducts a Business or Business Activity in the State.
Any other Person as may be determined by the Minister.
Non-Resident Persons
Have a Permanent Establishment In UAE.
Derive State Souced Income.
UAE Corporate Tax Filing & Deadlines
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 | Financial year-end 31 December | Financial year-end 31 March |
|---|---|---|
| First Tax Period 1 July 2023 – 30 June 2024 | 1 January 2024 – 31 December 2024 | 1 April 2024 – 31 March 2025 |
Analysis of UAE Corporate Tax
In Brief
Effective Date
The CT will be applicable for financial years starting on or after 1 June 2023.
Any company that adopts a fiscal year starting on 1 June 2023 and ending 31 May 2024 will be subject to CT starting 1 June 2023. The first tax return filing is likely to be due towards the end of 2024.
Any company that adopts a calendar year starting 1 January 2023 and ending 31 December 2023 will be subject to CT starting 1 January 2024 and filing is likely to be due towards mid-2025.
Rates
For resident taxable persons:
Taxable income not exceeding AED 375,000 shall be subject to zero rate.
Taxable income exceeding AED 375,000 shall be subject 9% rate.
For Qualifying Free Zone Persons:
Qualifying income subject to zero rate.
Taxable income that does not meet the Qualifying income definition shall be subject to 9% rate.
Exempt Income
The following types of income are exempted from the UAE corporate tax regime. However, it is recommended to consult with corporate tax consultants in UAE before making any tax-related decisions:
Dividends and capital gains earned from domestic and foreign shareholding.
Income of a Foreign Permanent Establishment.
Income derived by a Non-Resident Person from operating aircraft or ships in international transportation
Calculation Of Taxable Income
Taxable income under UAE corporate tax law is determined by the net profit or loss reported in financial statements. Companies can use various financial standards to compute taxable income, aiding start-ups and SMEs in reducing compliance costs. It’s recommended to consult expert corporate tax advisors in the UAE for accurate income assessment.
Tax Group
To form a Tax Group, the parent and subsidiaries must be resident entities, share the same Fiscal Year, and use identical accounting standards.
Additionally, to form a Tax Group, the parent company must:
Own at least 95% of the share capital of the subsidiary.
Hold at least 95% of the voting rights in the subsidiary.
Is entitled to at least 95% of the subsidiary’s profits and net assets.
Registering, Filing & Paying
Taxable Persons must submit a Corporate Tax return within 9 months after the relevant period ends. The payment deadline for Corporate Tax typically matches the return filing deadline for the corresponding Tax Period.
Corporate Tax Services We Offer
We offers the following corporate tax services in UAE.Companies need to fully prepare for the new form of taxation, as the introduction of the corporate income tax in the UAE is likely to change the regulatory environment of the country.
Evaluating and offering guidance on the company’s tax considerations.
Evaluating eligibility for corporate taxation. We provide advice on corporate tax exemptions for mainland, offshore, and free zone businesses, if applicable
Providing guidance on the reorganization of group companies, including overseas subsidiaries and branches.
Offering advice on the feasibility of foreign tax credits, withholding tax, and the deduction of expenses and interest.
Registering businesses for Corporate Tax, which involves the application process for obtaining a Tax Registration Number (TRN) through the Federal Tax Authority.
Preparation and filing of the Tax returns.
De-registration of Tax Registration Number.
Assessing and calculating the corporate taxable income for various corporate entity types.
Preparation of filing of tax documents for submission to the Federal Tax Authority (FTA).
Acting on behalf of businesses to file appeals against any penalties or notices issued by the Federal Tax Authority.
Acting as a representative, responding to, and submitting appeals in response to notices issued by the authorities.
Hedge Accounting Solution in the UAE has a skilled team that helps companies follow tax rules. We’ve already helped many companies with VAT and Excise Tax. Our good record can assist businesses with corporate tax needs in the UAE.
