Corporate Tax in UAE
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Corporate tax is going to be implemented soon in UAE, ensure your compliance with the Corporate Tax with our Corporate Tax experts in Dubai, UAE.
At ebs, we offer a wide range of corporate tax services to businesses operating in the UAE. Our experienced tax professionals have a deep understanding of UAE corporate tax law and regulations that allows providing our client with expert advice and guidance.
With ebs, you can be confident that your corporate tax requirements are being handled by experienced professionals. Our team of experts is dedicated to providing exceptional service support. We have helped many companies to avoid silly errors and penalties due to non-compliance with corporate tax. Contact us today to learn more about our corporate tax services and how we can help your business.
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Corporate Tax In UAE
A corporate tax or CT is a tax based on the profit rate of a corporation. Taxes are collected by the government of the country as a source of income, and the taxes are paid on a corporation’s taxable income. This taxable income of a company includes general and administrative expenses, depreciation, marketing and selling, costs of goods sold, development and research, and other operating costs.
What Is Corporate
Tax?
Corporate Tax is a form of direct tax levied on the profit of corporations or the net income of businesses. Corporate Tax is already being announced by the UAE Ministry of Finance on business profits. According to the UAE Federal Decree-Law No. 47 of 2022 on taxation, corporate tax will be implemented for financial years starting on or after 1st June 2023.
Importance Of Implementing Corporate Tax In UAE
Corporate tax rates are different in countries and vary widely. It can be beneficial for businesses to pay corporate taxes rather than paying additional individual income tax and it is easier for the companies to deduct losses.
- UAE corporate tax will be applicable across all the Emirates.
- The UAE aims to make its position a leading global hub for investment and business.
- UAE wants to accelerate its transformation and development to achieve its strategic objectives.
- UAE is reaffirming its commitment to meet international standards for tax transparency and to prevent harmful tax practices in the country.
Corporate Tax Rate
In UAE
The UAE ministry has announced that UAE Corporate tax will be levied on profit/taxable income at the following rate:
- There shall be 0% corporate tax for taxable income not exceeding AED 375,000.
- There shall be a 9% corporate tax for taxable income exceeding AED 375,000.
For instance, if a firm earns a taxable profit of AED 400,000 in a financial year, then the corporate tax will be AED 2,250 (AED 400,000 – AED 375,000 = AED 25,000 at 9%).
Corporate Tax In UAE
VS Other Countries
If we compare the UAE corporate tax with other competitive countries, then we can see that UAE has the lowest corporate tax rates.
- For example, the US has a 21% corporate tax rate, France has 26.5% and India has a 25% tax rate whereas UAE has a 9% tax rate. UAE is better for global investors because of its lowest corporate tax rate as compared to other competitive countries and GCC countries.
Applicability Of UAE Corporate Tax
Corporate Tax in Dubai will apply to:
All individuals and businesses conducting business activities under a commercial license in the UAE.
Business engaged in real estate management, development, construction, brokerage activities, and agency.
Foreign entities and individuals if they conduct business or trade in the UAE in a regular or ongoing manner.
Banking operations.
Free zone businesses have mainland-sourced income in respect of all their income.
All individuals and businesses conducting business activities under a commercial license in the UAE.
Foreign entities and individuals if they conduct business or trade in the UAE in a regular or ongoing manner.
Free zone businesses have mainland-sourced income in respect of all their income.
Business engaged in real estate management, development, construction, brokerage activities, and agency.
Banking operations.
Exemption From Corporate Taxes
The following entities are exempted from tax in UAE:
Businesses engaged in the extraction of natural resources are exempted from corporate tax.
The companies in a Designed Zone for VAT purposes can get a benefit of 0% CT rate on income from the sale of goods to UAE mainland business.
Qualifying intra-group transactions and reorganizations are exempted from UAE corporate tax if provided crucial conditions are met.
Capital and dividend gains by a UAE business from its shareholders are exempted from corporate tax services in UAE.
Tax Period
Federal Tax Authority (FTA) will be responsible for collecting, administrating, and enforcing corporate tax in the UAE. The rate of corporate tax in Dubai is also the same as other estates in UAE.
- Each tax return will have to be submitted to FTA within 9 months of the end of the respective Tax Period and the payment may also be paid in the same time period.
ebs Corporate Tax Services For
Businesses
If you have not considered the impact of Corporate Tax in Dubai, connect with ebs for a consultation with our tax experts. We can help you to get 100% ready to comply with CT once it is effective. We provide the following services:
- Our tax experts will present the tax reports and suggestions that comply with every FTA Act.
- Our expert tax managers team will convey the best tax practices according to your eligibility for businesses and provide guidance for difficulty regarding CT.
- Our professionals will provide tax reports that show accurate in-depth data on how the CT tax rate will affect business activities and transactions.
- Our expert team will ensure accurate UAE corporate tax reports after thorough analysis to ensure penalty-free corporate tax returns.
Frequently Asked Questions
Yes, Federal Tax Authority has already introduced the enforcement of corporate tax in UAE. According to the Federal Decree-Law No.47 of 2022 on taxation, UAE corporation tax will be implemented for financial years starting on or after 1st June 2023.
UAE corporate tax can be easily calculated if the business is having more than AED 375,000 net profit then there will be a 9% taxation rate on the net profit. For instance, if a firm earns a taxable profit of AED 400,000 in a financial year, then the corporate tax will be AED 2,250 (AED 400,000 – AED 375,000 = AED 25,000 at 9%).
UAE corporate tax can be easily calculated if the business is having more than AED 375,000 net profit then there will be a 9% taxation rate on the net profit. For instance, if a firm earns a taxable profit of AED 400,000 in a financial year, then the corporate tax will be AED 2,250 (AED 400,000 – AED 375,000 = AED 25,000 at 9%).
All businesses having annual taxable profit of more than AED 375,000 fall under the 9% taxation rate regime. If the business is in Dubai and is not exceeding the set net profit amount, then the payable tax will be zero.
There is no personal income tax in UAE, there are no individual tax registration or reporting obligation. The corporate tax will be implemented after June 2023 for the business having more than 375,000 AED.
The UAE does not have income tax on individuals but there will be a corporate tax on oil companies and foreign banks. Excise tax is levied on particular goods which are harmful to human health or the environment. Valued tax is also levied on the majority of the services and goods in the UAE.
There are fourteen countries with zero income tax in the world. The United Arab Emirates, Bahrain, Antigua and Barbuda, St. Kitts and Nevis, Cayman Islands, Vanuatu, Brunei, the Bahamas, Bermuda, Monaco, Kuwait, Qatar, Somalia, and Western Sahara.
However, there is no income generated or income tax in Dubai and no sales tax on most of the services and goods, but it is not 100% tax-free.
The local population of Dubai is not paying these taxes, but the tourists pay these taxes. Some hidden taxes are levied in amusement parks, theaters, or any sources of leisure and entertainment.
No, if we compare the UAE corporate tax with other competitive countries, then we can see that UAE has the lowest corporate tax rates.
The goal of introducing the corporate tax in the UAE is to make its position a leading hub for investment and business. UAE wants to become one of the competitive markets globally and the taxation policy had to be implemented in UAE.
If your company is eligible for both VAT and CT, then it will have to pay both taxes simultaneously. If your company does not meet the criteria of VAT but requires paying Corporate Tax than CT will be paid.
Reach out to ebs for Corporate Tax services in Dubai, UAE to get help with international standards services.