Corporate Tax is a direct tax levied on the net income and profits of corporations and other entities. In some jurisdictions, Corporate Tax is also known as Corporate Income Tax (CIT) or Business Profits Tax.
There will be a UAE Corporate Tax for all UAE businesses, except for natural resource extraction, which will continue to be a matter of Emirate taxation.
To be subject to Corporate Tax in the UAE, foreign entities and individuals must conduct ongoing or regular business in the country.
Currently, the UAE does not have a federal Corporate Tax regime. By tax decrees, CT is determined for each Emirate. In the UAE, corporate tax is only imposed on oil and gas companies and foreign banks’ branches. Moreover, the UAE is home to more than 40 free zones, each with its own rules and regulations. In general, such zones offer significant tax benefits to companies incorporated therein, making the UAE an attractive jurisdiction in terms of taxes. Furthermore, the UAE does not tax employment-based income.
CT will be charged on the annual taxable income of a business as follows:
In UAE VAT, any person conducting business is not allowed to have more than one Tax Registration Number (TRN), unless otherwise prescribed in the UAE Executive Regulation. Thus, even if you are operating via branches in more than one Emirate, only one VAT registration is required. With a similar objective, if two or more persons are related or associated parties in the businesses, they are allowed to apply for VAT group registration.
VAT-registered businesses collect the amount on behalf of the government; consumers bear the VAT in the form of a 5 per cent increase in the cost of taxable goods and services they purchase in the UAE.
UAE imposes VAT on tax-registered businesses at a rate of 5 per cent on a taxable supply of goods or services at each step of the supply chain.
Tourists in the UAE also pay VAT at the point of sale.
VAT applies equally on tax-registered businesses managed on the UAE mainland and in the free zones. However, if the UAE Cabinet defines a certain free zone as a ‘designated zone’, it must be treated as outside the UAE for tax purposes. The transfer of goods between designated zones are tax-free.
Business Impact Assessment, review of key documents like existing contracts and incorporation of VAT clauses in the existing and new contracts and related documents.
Advise, develop and assist in restructuring transactions, supply chain and other related processes, Advise and support for requisite changes in the IT systems and applications.
Assist in VAT registrations and in the preparation and filing of VAT returns. Align compliance practices with VAT requisites.