- September 5, 2023
- Posted by: Shuraa Tax Consultant
- Category: Corporate Tax
While the UAE Corporate Tax Law is undergoing its finalization process, the Ministry of Finance (MoF) has taken proactive steps by releasing guidelines and a consultation document to assist businesses in their readiness efforts. Esteemed chartered accounting firms such as Shuraa Tax Dubai’s corporate tax consultants are already delivering corporate tax services. Furnishing essential guidance on compliance necessities to businesses.
So, Companies in the mainland and Freezone can determine their tax status by engaging with top corporate tax consultants. However, Prepare the necessary documents and financial records, and understand tax rates, exemptions, and various regulations. Therefore, Complying with corporate tax ensures avoiding penalties and maintaining trust and transparency with investors and shareholders. Stay informed and well-prepared to succeed in the evolving tax landscape.
Understanding the Scope of UAE Corporate Tax
- So, The UAE Corporate Tax applies to all businesses and individuals conducting commercial activities under a valid license in the UAE.
- Free Zone businesses are also subject to UAE CT. But those complying with regulatory requirements and solely operating within the Free Zone are eligible for the current CT incentives.
- However, Foreign entities and individuals fall under the CT scope; So, if they conduct ongoing or regular trade or business operations in the UAE.
- Therefore, Banking operations are included within the ambit of the UAE Corporate Tax.
- Businesses involved in real estate management, construction, development, agency, and brokerage activities are also subject to the UAE CT regulations.
UAE Corporate Tax Rate
Moreover, Entrepreneurs in Dubai corporate tax consultants advisory services to grasp the implications of the UAE’s highly competitive corporate tax rate. So, The tax will be levied on businesses’ annual taxable income and understanding its application.
- 0%: Applicable to taxable income up to AED 375,000.
- 9%: Applied to taxable income exceeding AED 375,000.
Exceptions and Tax Benefits in the UAE Corporate Tax Regime
However, Corporate tax advisors based in Dubai emphasize that certain individuals are exempt from taxation. Furthermore, suppose a corporation generates income outside the United Arab Emirates (UAE) & pays taxes on those earnings in another jurisdiction. In that case, the company can claim tax credits against its UAE corporate tax liability. Effectively exempting it from being taxed on those foreign profits within the UAE.
Corporate Tax Consultants in Dubai for Free Zones
Furthermore, Free Zone enterprises, including financial free zones, will be liable for Corporate Tax. So, A qualified individual or entity within a free zone can continue engaging with mainland clients and international. Moreover, Provided these transactions meet the de-minimus and other stipulated criteria. Therefore, Companies established within free zones must complete a Corporate Tax Return registration and submission.
Which types of entities are excluded from the UAE Corporate Tax?
So, Businesses can seek guidance from Dubai corporate tax consultants to ascertain their eligibility for exemption from the corporate tax regime. The following entities are exempted from the UAE corporate tax:
- The UAE Federal Government, Governments of the Emirates, their departments, authorities, and public institutions.
- UAE companies wholly owned by the Government, conduct sovereign or mandated activities, and listed in a Cabinet Decision.
- Emirate-level taxes apply to companies engaged in extracting and exploiting natural resources in the UAE.
- Charities and public benefit organisations are listed in a Cabinet Decision.
- Social security and retirement pension funds, whether publicly managed or regulated private entities.
- Investment funds meet specific conditions.
Defining ‘Residents’ under UAE Corporate Tax Law
If foreign companies are effectively managed and controlled within the UAE; they will be considered residents for the purpose of taxation. Effective management and control mean that the company’s decision-makers or directors make key management and commercial decisions in the UAE. To determine your residence/non-residence status, consult our corporate tax advisors in Dubai.
Corporate Tax for Non-Residents in the UAE
Non-resident entities will be liable for corporate tax in the UAE on two fronts:
- Taxable income earned from their Permanent Establishment in the UAE.
- Income sourced within the UAE.
Income Exemptions in Corporate Tax Consultants in Dubai
The UAE corporate tax regime grants exemptions for the following types of income. However, it is advisable to seek guidance from corporate tax consultants in Dubai before making any tax-related decisions:
- Dividends received, and capital gains earned from the sale of shares of a subsidiary company are exempt from CT.
- All domestic dividends earned from UAE companies; Including those paid by a Free Zone Person benefiting from the 0% CT regime.
- Under specific conditions, dividends distributed by foreign companies and capital gains arise.
- UAE companies can claim a foreign tax credit for taxes paid in the foreign branch country or elect an exemption for their foreign branch profits.
UAE Corporate Tax Registration and Deregistration
Businesses liable for corporate tax must undergo corporate tax registration with the Federal Tax Authority (FTA) in the UAE and obtain a Tax Registration Number within the specified timeframe. Conversely, businesses no longer subject to corporate tax must apply for corporate tax deregistration within 3 months of cessation or liquidation. Corporate tax consultants in Dubai are available to aid businesses in both tax registration and deregistration processes.
Who is Included in the UAE Corporate Tax Bracket?
- Natural Persons: The corporate tax regime in the UAE encompasses natural persons, including sole establishments, proprietorships, and individual partners in unincorporated partnerships, engaged in business or commercial activities in the UAE. However, there won’t be a parallel tax on their individual income.
- Legal Persons: The category of Legal Persons includes UAE companies and other legal entities incorporated in the UAE. Additionally, foreign legal entities with a permanent establishment or earning income in the UAE are subject to corporate tax. This group comprises Limited Liability Companies (LLC), Private Shareholding Companies (PSC), Public Joint Stock Companies (PJSC), and entities established under UAE laws with separate legal identities. For a comprehensive understanding of corporate tax implications on their profits, businesses can seek guidance from corporate tax consultants in Dubai.
Calculation of Taxable Income and Formation of Tax Groups in the UAE
- Taxable Income Calculation: Under the UAE corporate tax law, taxable income is determined based on the accounting net profit (or loss) position in the financial statements, following the International Financial Reporting Standards (IFRS). Additionally, businesses can use alternative financial reporting standards for calculating taxable income, which is especially beneficial for start-ups and SMEs. Engaging the services of top corporate tax advisors in the UAE ensures an accurate assessment of taxable income.
- Formation of Tax Groups: A group of UAE resident companies can form a corporate tax group, treated as a single taxable entity if the parent company holds at least 95% of its subsidiaries’ share capital. So, To qualify for this tax grouping, the parent company and all its subsidiaries must not be exempt persons or Free Zone Persons benefiting from the 0% corporate tax rate. Additionally, all group members must follow the same financial year. However, Corporate tax advisors in Dubai can assist companies in establishing a tax group in compliance with regulations.
Corporate Tax Filing, Payment, and Refund Process in the UAE
1. Tax Return Filing:
So, Tax Return Filing is a crucial financial responsibility for individuals and businesses alike. However, It involves accurately reporting income, deductions, and credits to determine the amount of tax owed. Meeting tax filing deadlines and adhering to tax regulations is essential to avoid penalties. For detailed information on administrative requirements, consult corporate tax advisors in Dubai.
2. Filing Deadline and Payment:
Moreover, Businesses must submit the tax return & supporting documents to the FTA within nine months of the end of the relevant Tax Period. Payments must be made within the same nine-month timeframe following the end of the relevant Tax Period.
3. Tax Refund Application:
If a taxpayer can demonstrate eligibility for a corporate tax refund; they can apply for a tax refund request to the FTA. The application process involves providing relevant evidence to support the refund claim.
Rely on corporate tax advisors in Dubai to navigate through the tax return filing, payment, and refund procedures.
UAE Corporate Tax Filing Deadlines for Different Financial Year-Ends
The following table outlines the corporate tax filing deadlines based on different financial year-ends:
- Financial year-end: 30 June First
Deadline to Submit the return: 31st 2025
- Financial year-end: 31 December
Deadline to Submit the return: 30th Sep 2025
- Financial year-end: 31 March
Deadline to Submit the return: 31st Dec 2025
Shuraa Tax: Comprehensive Dubai Corporate Tax Consultants
The introduction of corporate tax in the UAE signals a significant regulatory shift. It needs companies to be fully prepare for compliance. Corporate tax consultants in Dubai, like Shuraa Tax, specialise in providing vital tax assessments. Our range of corporate tax services in Dubai includes:
Corporate Tax Assessment and Advisory:
- Evaluating and advising on tax implications for your company.
- If applicable, determine corporate tax eligibility and advise on mainland, offshore, and free zone business exemptions.
- Analysing tax grouping possibilities to avail tax benefits.
- Providing guidance on group company restructuring, including foreign subsidiaries/branches.
- Offering insights into foreign tax credits, withholding tax, and deduction of expenses and interests.
Corporate Tax Compliance:
- Assisting with business registration for Corporate Tax, including applying for a Tax Registration Number with the Federal Tax Authority.
- Accurately computing corporate taxable income for different corporate structures.
- Expertly preparing and filing Tax returns.
- Managing the deregistration process for the Tax Registration Number.
Corporate Tax Agent Representation:
- Skillfully preparing and submitting tax documents to the Federal Tax Authority.
- Representing and responding to notices issued by tax authorities.
- Handling appeals against penalties or notices from the Federal Tax Authority.
With our team of highly qualified Chartered Accountants and tax agents in the UAE. Shuraa Tax ensures impeccable tax compliance for businesses. We have a proven track record of successfully assisting thousands of companies in complying with Value Added Tax and Excise Tax. Making us a reliable partner for meeting corporate tax requirements in the UAE.
Stay Informed with Shuraa Tax: Best Dubai Corporate Tax Consultants
As UAE’s business income taxes undergo continuous reforms, staying well-informed and compliant is crucial. Seeking guidance from a tax professional firm is the best way to navigate this evolving landscape. Shuraa Tax, a prominent corporate tax consultant in the UAE, offers comprehensive tax services to businesses throughout the country. For more information, reach out to us today at +971 508912062 or send an email to firstname.lastname@example.org. Ensure your business’s tax success with Shuraa Tax by your side.
Q1. Could numerous corporations potentially file taxes as a unified entity under specific circumstances?
The UAE’s corporation tax code may set to implement highly lenient loss utilization regulations. This creates the opportunity for UAE-based companies to opt for filing their taxes collectively. If faced with losses or involved in intragroup transactions; these companies may be entitled to submit relief claims on behalf of the entire group (units).
Q2. What is the corporate tax rate?
Corporate profits will be subject to a standard statutory rate of 9%. However, taxable profits up to AED 375,000 will enjoy a 0% tax rate, aimed at fostering growth for small businesses. Specific slab rates have not been finalized yet, and there may be potential changes in the future. Nonetheless, the initial corporate tax rate in the UAE is poised to be one of the most competitive globally.