Corporation Tax In UAE
The authorities in UAE announced the introduction of corporate tax and it will be implemented on 1st June 2023. According to the law, a taxable business or a person will be subjected to a 9% corporate tax from the start of their first financial year on or after 1st June 2023.
Since the Federal Tax Authority announced the corporate tax in the UAE, all the businesses got more alert about their business. With this announcement, UAE is ready to become the fourth among the GCC countries to introduce a federal corporate tax.
The aim of the federal corporate tax in UAE is to strengthen the position of the country as a leading business hub in the world. Moreover, the corporate tax introduction helps in meeting international standards for tax transparency and avoiding tax evasion.
Corporation Tax In UAE
Corporate tax is a form of direct tax levied on the net profit or income of businesses and it is also known as corporate income tax. All businesses whose taxable profit is more than 375,000 AED are eligible for UAE corporate tax and are required to pay a 9% corporate tax rate.
Corporation Tax In UAE
What Is The Way Forward For Businesses With UAE Corporate Tax?
There is a lot to take care of for the business as we are walking toward ‘June 2023.’ As there is still time for the implementation of corporate tax, businesses have a lot of time to prepare for corporate tax. The most important thing today is to make sure that financial statements are transparent and without any fault.
These financial statements will be used to determine the eligibility of the corporate tax to pay. The accuracy of business data defines the accuracy of the financial statements that will ensure the right amount of corporate tax.
The business being ready for corporate tax does not mean that the businesses will start acting on the date of implementation. All corporations and businesses need to take initial steps to ensure their preparation for the corporate tax. There are two types of corporations that must file for federal tax:
C corporation: A legal structure in which the shareholder or the owner is taxed separately from the entity.
Corporation Tax In UAE
S corporation: A type of corporation that may pass income along with deductions, credits, and losses directly to shareholders.
These are the 7 steps for preparing UAE corporate tax:
- Determine your tax deductions for write-offs.
- Know if your corporation is a C corporation or an S corporation.
- Pay your estimated taxes to the IRS.
- File your federal tax return by its due date.
- File your state tax returns by their due dates.
- File local tax returns by their due dates
- File international taxes for any business in other countries
Common Challenges For Corporations
Tax teams face many challenges in filing taxes and preparing tax returns accurately. It is essential to keep up with the changes in tax rules and regulations which happens very often. It can be difficult if you have to file taxes in multiple jurisdictions. You can consult with other top best companies to help you deal with your taxation. These companies use the best tax and accounting tools to carry out the taxation records accurately and swiftly.
Tax technology can help you file your company’s corporate tax returns faster, more accurately, and more efficiently. ebs is assisting all corporations and small business start-ups to prepare for their corporate tax in UAE. We are a team of experts who are familiar with all the corporate tax rules and regulations as well as VAT. Connect with us and handle your taxation without any pressure.
Reach out to our accountants for a meaningful discussion on corporate tax and its regulations.