The Ministry of Finance in UAE has introduced Corporate Tax Law for all the business profits. Every taxable person needs to register for this before the filing of their first return. This blog will focus on the companies who must register for Corporate Tax. The Corporate Tax is based on the profits that are calculated according to International Financial Reporting Standards (IFRS) after the adjustments are made according to the UAE Corporate Tax Law.
Who is a taxable person?
An explanation below will help you understand who a taxable person in UAE is and what are the different categories that distinguish one taxable person from the other.
There are two main taxable persons in UAE, Resident and Non-Resident.
- A resident person may be incorporated in UAE, a natural person and any other person determined in federal law decision.
- An incorporated person can be incorporated in or outside UAE, the person incorporated in UAE may be the one incorporated recognized person or a freezone person. A person incorporated outside UAE may be a controlled or managed person in UAE.
A Non-Resident person is one who has permanent establishment in UAE, derived UAE sourced income or has nexus in UAE.
Who is applicable for Corporate Tax Law?
The tax is applicable depending upon the revenues of the companies.
- If the revenue is 0 to AED 1 million, the natural person including sole establishments will not need registration, the mainland legal entities and non-QFZE will need registration, but corporate tax will not be payable and if the entities are qualifying free zone entities (QFZE) they will need registration, financial audit will be mandatory, and tax will be payable on non-qualifying income.
- If the revenue is AED to 3 million, the natural persons including sole establishments will not need registration, the mainland legal entities and non-QFZE will need registration, but corporate tax will not be payable and if the entities are qualifying free zone entities (QFZE) they will need registration, financial audit will be mandatory, and tax will be payable on non-qualifying income.
- If the revenue is AED 3 to 50 million, the natural person including sole establishment, mainland legal entities and non-QFZE will need registration, corporate tax will be payable and qualifying free zone entities will need registration, financial audit is mandatory, and tax will be payable on non-qualifying income.
- If the revenue is AED 50 to 200 million, the natural person including sole establishment, mainland legal entities and non-QFZE will need registration, corporate tax will be payable as well as financial audit will be mandatory and qualifying free zone entities will need registration, financial audit is mandatory, and tax will be payable on non-qualifying income.
- If the revenue is greater than AED 200 million the natural persons including sole establishment, mainland legal entities and non-QFZE will need registration, corporate tax will be payable, financial audit will be mandatory and transfer pricing documentation will be mandatory, same will be the case of qualifying freezone entities.
There are some persons who are exempted from Corporate Tax registration those are:
- Government and government-controlled entities, extractive business and non-extractive natural resource business while qualifying public benefit entity, qualifying investment fund, public/private pension fund, social security fund and entities wholly owned and controlled by the exempt will need the registration.
- Natural persons business and activity corporate tax will not be applicable, and the registration will not be required on the salary income, personal investment income and real estate investment income.
How ebs Chartered Accountants help you with your registration of Corporate Tax?
ebs Chartered Accountants are a leading team providing different services for different businesses. ebs have a deep understanding of tax laws and regulations, they work through tax codes and ensure compliance with all the legal requirements. ebs play a crucial role in helping corporations manage their taxes efficiently and effectively, which contributes to their financial success. They can assist corporations in developing tax-efficient strategies to minimize their tax liabilities and penalties as they make sure that the tax is filed on time. They can represent corporations during tax audits, ensuring that all necessary documentation is in order and guiding them through the audit process. Expert advice on tax-related issues, helping corporations make informed decisions that perfectly align with their financial goals and objectives. They can identify opportunities for tax optimization, such as tax credits and deductions, to help corporations maximize their tax savings. They are known for their reputation for quick delivery of work in different fields.
FAQs
Do all companies have to pay corporate tax in UAE?
The UAE has introduced a federal tax system that is applicable to mostly all businesses. However, there are certain exceptions for natural businesses and governmental entities.
Is there a deadline to register for corporate tax in UAE?
UAE has set Corporate Tax Registration Deadlines: that can help avoid penalties if you register according to the timeline issues.
Who is eligible for corporate tax in UAE?
Corporate tax is basically applied to all businesses and individuals conducting business activities under a commercial license in the UAE. The timeline and some pointers may differ depending upon the revenue being generated by the company.