Understanding Corporate Tax:
First, it is important to understand Corporate Tax Dubai. It is the tax which is basically charged on the profits on an income of a business in the UAE. Corporate Tax varies from country to country, UAE’s authority has worked hard on their corporate tax laws, at start it was a surprise for many businesses as Dubai has always been a tax-free country and all the seven Emirates had their own laws, which is why it took some time for the businesses to settle down with this new law. The main reason for the introduction of Corporate Tax was to enhance transparency factor in businesses and to align with the global standards. Recently amendments were made in the Corporate Tax law which has explained about the taxable persons and the new deadlines for the registration of corporate tax. There are a several corporate tax consultants who have been providing Corporate Tax services in UAE. This blog will help you understand the Dubai company tax registration and its impact on the businesses in UAE.
Who is a Taxable Person?
There are two categories for a taxable person,
Resident Person: It encompasses the income that generates from domestic and international sources both.
Non-Resident Person: It is solely based on the income which is generated from a source within UAE only.
When and How to Register?
The Federal Tax Authority (FTA) has introduced a portal used for Corporate Tax Registration; corporate tax consultants can help you understand this process. In the recent amendments the deadline for registration has been changed depending upon the categories of the business. This timeline depends on the date of License Issuance irrespective of year of issuance, for example if the date of license issuance is 1 January – 31 January or 1 February – 28/29 February the deadline for registration will be 31 May 2024 and if the person did not have a license at the effective date of this decision, then the deadline for registration will be 3 months after the effectiveness of the decision implemented.
The Impact of Corporate Tax Registration on Business Operations in Dubai
The Corporate Tax has a few drawbacks but many positive impacts on the businesses in UAE. The main drawback is that it is a newer tax law, it is a time taking processes for the businesses to understand and implement it. After the recent deadline a few businesses may face problems registering on time, because if they do not register on time, they will have to face penalties: AED10,000 that could affect their business.
Positive Impacts of Corporate Tax Registration
- It will be an advantage for the business owners as they will not have to pay induvial income tax, their medical insurance, and other benefits like retirement plans will be deducted from CT.
- The revenue generated from CT will be reinvested in the infrastructure and public services that will also have a positive impact on the country’s well-being.
- As Dubai is a non-oil industry, it accounts for over 70% annual GDP, CT will aid in growth of it, and help country in return.
- Corporate Tax will provide benefits to the citizens, that includes increased government revenue and expenditure, the government will be less dependent on hydrocarbon revenue.
- It will improve foreign direct investment; in a short time, it will increase the country’s GDP to 2-3%.
- The corporate tax in UAE is a competitive tax corresponds to international standards, that helps UAE to be a premier location for business and investment with an average tax rate worldwide being 24%.
- The corporate tax in UAE is much less in comparison to the other Gulf countries.
How can ebs Chartered Accountants help?
ebs Chartered Accountants are serving as a corporate tax consultant in Dubai. Along with many other services they are experts in CT helping your business with timely and accurate registration. The team at ebs is well trained and up-to-dated with the recent amendments to the laws. They have already helped many clients with their CT needs in a short period of time. Hiring ebs for your Corporate Tax registration will ensure that your registration is done seamlessly and in compliance with local rules and regulations. Any issues in the process will be handled by the experts. You will be updated at each step of your registration process once the registration is done ebs will help you with your tax filling as well. Contact us to help you with your corporate tax registration.
FAQs
Is it necessary to register for corporate tax in UAE?
All taxable persons are required to register for UAE Corporate Tax and obtain a Corporate Tax Registration Number as per the UAE Corporate tax law and following implementing decisions.
What documents are required for Corporate Tax Registration?
For natural persons, a trade license and personal identification are needed. Legal persons need additional documents like proof of authorization.
What is the tax rate for Corporate Tax in the UAE?
For resident taxable persons, the rate is 0% for income not exceeding AED 375,000 and 9% for income above that. For qualifying free zone persons, it’s 0% on qualifying income.
Why has the UAE introduced Corporate Tax?
A competitive Corporate Tax regime based on international best practices is expected to strengthen the UAE’s position as a leading global hub for business and investment and accelerate the UAE’s development and transformation to achieve its strategic objectives.