Comprehensive Guide to Corporate Tax in the UAE
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Overview
Corporate taxation primarily targets a company's profits and net income, with Corporate Income Tax (CIT) specifically focusing on earnings. Therefore, businesses must actively understand and adhere to CIT regulations to ensure compliance and maintain effective financial management.
Our Corporate Tax Service in the UAE Includes
A business subject to CT will need to register with the FTA and obtain a Tax Registration Number within a prescribed period.
For every tax period, businesses will need to prepare and file a tax return along with other related schedules.
Conduct of a health check to review the current tax position of your business and provide relevant VAT advice.
VAT Implementation in UAE made it mandatory for the businesses to keep a full record of their accounts & daily transactions.
With our extensive experience, we specialize in conducting reviews of tax compliance for local entities, ensuring the integrity and accuracy of a company's tax systems and processes.
When a business ceases to be subject to the CT, the CT registration must be deregistered within 3 months.
Points To Be Noted on Corporate Tax in UAE
- Corporate Tax Registration. In the United Arab Emirates, businesses and individuals with commercial licenses must acquire a license. However, free zone businesses that comply with all regulatory requirements and refrain from operating in the UAE’s mainland will continue to enjoy the existing corporate tax incentives.Foreign entities and individuals are required to obtain a license if they regularly engage in trade or business activities within the UAE. This rule also extends to those involved in banking, real estate management, construction, development, as well as agency and brokerage services.
- Corporate Tax Filing. CT will be levied on a business’s annual taxable income according to the following structure:For taxable income not exceeding AED 375,000, the rate is 0%.For taxable income exceeding AED 375,000, the rate is 9%. Furthermore, a separate tax rate, yet to be determined, will apply to large multinationals that meet specific criteria under Pillar II of the OECD BEPS. With the Consultation Document highlighting the UAE’s commitment to adopting BEPS 2.0 measures, this rate is expected to align with the final rate set by the OECD.
- Corporate Tax Refund. Under the UAE Corporate Tax Law, a corporate tax refund may be available. If a Taxable Person makes a payment to the Federal Tax Authority (FTA) that exceeds the Corporate Tax due, they can apply for a refund. In such instances, the Taxable Person can claim a Corporate Tax Refund from the FTA. Consequently, businesses must be diligent in tracking their tax payments to ensure they can take advantage of any potential refunds.
- Corporate Tax Implementation. In the UAE, VAT-registered businesses collect the tax on behalf of the government. Consequently, consumers bear the VAT cost through a 5 percent increase in the price of taxable goods and services they purchase. Moreover, the UAE imposes a 5 percent VAT on tax-registered businesses for every taxable supply of goods or services at each step of the supply chain. Additionally, tourists in the UAE pay VAT at the point of sale.
- Corporate Tax Review. 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.
- Corporate Tax De-registration. At the end of each tax period, VAT registered businesses or the ‘taxable persons’ must submit a ‘VAT return’ to Federal Tax Authority (FTA).A VAT return summarises the value of the supplies and purchases a taxable person has made during the tax period, and shows the taxable person’s VAT liability.
Our Corporate Tax Service Procedure
Planning & Evaluation
Moreover, when strategizing for corporate income tax management, it is essential to stay updated on the latest advancements in tax legislation, rules, and international tax agreements. Ensuring compliance with these regulations not only enhances tax planning approaches but is also vital for your business. Similarly, diligently maintaining accurate and comprehensive records for all business transactions and expenses related to tax matters is crucial. Likewise, we are ready to support you by rectifying your accounting records, ensuring their accuracy, and preparing your company for corporate taxation in the UAE.
Training & Development
Implementation & Compliance
To achieve effective implementation and compliance with corporate income tax in the UAE, companies must proactively engage in tax planning, meticulous documentation, and strict adherence to tax laws and regulations.
Moreover, companies may opt for professional assistance from audit firms in Dubai, accountants, and legal experts to ensure seamless compliance with tax laws and regulations.
Comprehensive Guide to Corporate Tax in the UAE
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