Corporate Tax
The United Arab Emirates (UAE) Ministry of Finance (Ministry) announced on 31 January 2022 that it will introduce a federal corporate tax regime for the first time in the UAE.
Corporate Tax in United Arab Emirates
For the first time in the UAE, the Ministry of Finance announced on January 31, 2022 that a federal corporation tax regime would be implemented. Corporate tax is a type of direct tax paid on companies and other enterprises’ net profits.
Except for the extraction of natural resources, which will continue to be subject to Emirate-level corporate taxation, UAE Corporate Tax will apply to all UAE firms and commercial activities.
Only foreign firms and individuals that conduct continuous or regular trade or business in the UAE will be subject to UAE C.T
Except for the extraction of natural resources, which will continue to be subject to Emirate-level corporate taxation, UAE Corporate Tax will apply to all UAE firms and commercial activities.
Only foreign firms and individuals that conduct continuous or regular trade or business in the UAE will be subject to UAE C.T
Our Accounting Outsourcing Process
For financial years beginning on or after June 1, 2023, the UAE Corporate Tax regime will take effect:
From 1 July 2023 to 30 June 2024, a business that has a financial year that begins on 1 July 2023 and ends on 30 June 2024 will be subject to UAE Corporate Tax (which is the beginning of the first financial year that starts on or after 1 June 2023)
From 1 January 2024, a business with a (calendar year) financial year beginning on 1 January 2023 and ending on 31 December 2023 will be liable to UAE Corporate Tax (which is the beginning of the first financial year that starts on or after 1 June 2023)
Registration and filing
The act of registering and filing
For UAE CT purposes, businesses will be required to register. More details about the registration process will be available soon.
Businesses must file an electronic UAE CT return once every financial period. In most cases, a financial period is a year. There will be no need for provisional or advance CT filings. There will be no need to make UAE CT payments in advance.
For UAE CT purposes, businesses will be required to register. More details about the registration process will be available soon.
Businesses must file an electronic UAE CT return once every financial period. In most cases, a financial period is a year. There will be no need for provisional or advance CT filings. There will be no need to make UAE CT payments in advance.
Corporate Taxable Profits and Rates:
The taxable income of a business will be its accounting net profit, adjusted for specific items that will be stipulated under UAE CT law. A UAE company’s dividends and capital gains from eligible shareholdings will be tax-free.
Business losses can be adjusted against taxable income in following financial periods (as of the UAE CT implementation date). Foreign CT paid on taxable income in the UAE may be used to offset the UAE CT liability.
Tax Rate
Example
Tax Rate
- 0% for taxable income up to AED 375,000;
- 9% for taxable income above AED 375,000; and
- a different tax rate for large multinationals that meet specific criteria.
Example
If a company earns AED 400,000 in taxable profit in a given financial year.
The CT liability will be calculated as follows:
The CT liability will be calculated as follows:
- Taxable income of AED 0 – AED 375,000 at 0% = AED 0
- Portion of taxable income exceeding AED 375,000 (i.e. AED 400,000 – AED 375,000 = AED 25,000) at 9% = AED 2,250.
Free Zones
For the first time in the UAE, the Ministry of Finance announced on January 31, 2022 that a federal corporation tax regime would be implemented. Corporate tax is a type of direct tax paid on companies and other enterprises’ net profits.
Except for the extraction of natural resources, which will continue to be subject to Emirate-level corporate taxation, UAE Corporate Tax will apply to all UAE firms and commercial activities.
Only foreign firms and individuals that conduct continuous or regular trade or business in the UAE will be subject to UAE CT.
Except for the extraction of natural resources, which will continue to be subject to Emirate-level corporate taxation, UAE Corporate Tax will apply to all UAE firms and commercial activities.
Only foreign firms and individuals that conduct continuous or regular trade or business in the UAE will be subject to UAE CT.
Tax Groups
Tax Groups If certain circumstances are met, a group of UAE firms can form a tax group and be classified as a single taxable person.
If certain circumstances are met, tax losses from one group company can be used to offset taxable income from another group firm.
A tax group in the UAE will only have to file one tax return for the entire group.
If certain circumstances are met, tax losses from one group company can be used to offset taxable income from another group firm.
A tax group in the UAE will only have to file one tax return for the entire group.
Frequently Ask Questions
UAE CT will not apply on an individual’s salary and other employment income (whether received from the public or private sector).
The investment in real estate by individuals in their personal capacity should not be subject to UAE Corporate Tax provided the individual is not required to obtain a commercial license or permit.
UAE CT will generally apply to income earned from activities carried out under a freelance license/permit.
How can AlFahad Tax Consultancies
assist you?
Since its beginning, we have been at the front of UAE Tax, effectively handling tens of thousands of clients. Our experts can walk you through the steps and assist you in compiling the paperwork required by the FTA.
AlFahad Tax Consultancies is a certified tax agent in the United Arab Emirates. Our Tax Experts have handled and regulated a variety of circumstances and provided the best available solutions to businesses to ensure that they continue to function in the most efficient and effective manner possible.
For our clients, only the best will do, and our considerable experience in the UAE will ensure that your company receives the best and most timely services without sacrificing quality.
What our Clients say?
We’ve been using AlFahad Tax Consultancies
services since 2011. Their Accountants are very professional, efficient and has been a great support to our accounts team over the years.
Ahmed Khalil
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