All About UAE Corporate Tax

Understanding Corporate Tax In The UAE

The UAE has long been an attractive avenue for businesses and individuals looking to further their professional growth. The favourable tax regimes here have also led to various countries expanding their global presence by setting up an office in the UAE. Capitalising on this widespread business presence, the government has introduced a Corporate Tax of 9% from 1st June 2023. This is a direct tax that will help the government in various developmental activities throughout the region.

UAE Corporate Tax       

This tax has been introduced for businesses with a permanent establishment in the UAE with a net profit of AED 375,000 and above. A tax rate of 9% will be levied on business profits arising from the sale of goods and services including domestic and foreign sales. It is applicable on business profits generated by an individual and a corporate entity. For more guidance on if this tax applies to your business or not, please reach out to a top corporate finance consulting firm in Dubai.

Non-residents may also fall under this new tax regime. For them, the tax would only be levied on income generated from a permanent establishment in the UAE or through direct income from the UAE.

UAE Corporate Tax Exemptions

Companies with net profits under AED 375,000 are exempt from corporate tax.

In the case of a foreign entity with a branch office in the UAE, the Corporate Tax will be only levied on the net profits from the UAE office. The whole income of the parent company will not be taxable.

Businesses operating in the Free Zones will be exempt from taxes as long as they only conduct business with Free Zones or overseas and not with UAE Mainland.

The government has also introduced exemptions for various businesses operating in crucial sectors such as electricity generation and natural resources as long as they meet certain criteria.

Compliance Criteria for Tax Payers

The UAE Corporate Tax is a Federal Tax and is applicable across all Emirates. It is proposed that the tax revenue collected will be shared between the Federal and Emirati Government and support infrastructural development in the region. For tax payers, certain compliance measures are important as mentioned below.

• The taxpayers must register for a Corporate Tax Registration Number (TRN) with the FTA.
• All financial statements must be duly prepared and maintained according to the accounting standards mandated in the UAE. A top finance consultancy company in Dubai can help you get all your paperwork in order.
• Receive an audit certification of financial statements from a third-party financial auditor.
• File the corporate tax return within the stipulated time period of 9 months.

Conclusion

To ensure a seamless business experience in the UAE, it is crucial to be compliant with all the necessary legal and financial regulations. Any errors in these documents can lead to heavy penalties which can also impact business credibility.

UAE Corporate tax comes with various incentives and conditions that need to be considered independently for each business activity to avoid trouble. To ensure your firm is in line with all the mandated regulations, be sure to partner with a top corporate finance consulting firm in Dubai.