With the UAE’s new corporate tax law, many companies find themselves navigating unfamiliar laws and processes. Our team of tax experts can help you understand how corporate tax applies to your business, take advantage of tax exemptions and reliefs, and make sure you meet the compliance deadlines on time to avoid penalties.
From registering your business for corporate tax, complying with the accounting standards, and filing your corporate tax submission, our team is ready to guide you through each step for a smooth, efficient, and cost-effective process.
MUST KNOW
Every business in the UAE must do these three things to comply with the new corporate tax scheme:
1. Register for corporate tax from June 2023 onwards.
2. Keep accounting records up to the required reporting standard (e.g. IFRS).
3. File a corporate tax submission with the Federal Tax Authority.
While not all businesses have to pay corporate tax, every business must still register and comply with these steps to verify whether they qualify for a tax exemption.
Our UAE Corporate Tax Services
Corporate tax advice
Our experts provide guidance on corporate tax considerations, including potential exemptions and how to maximize their benefits for your business.
Corporate tax registration
Our team will help register your business for corporate tax with the FTA and manage all related deadlines.
Corporate tax returns
Our experts provide guidance on corporate tax considerations, including potential exemptions and how to maximize their benefits for your business.
Why Corporate Tax?
The UAE has been a top choice for entrepreneurs and investors due to its political stability, strategic location, world-class business infrastructure, and historically 0% corporate tax regime. However, as the UAE diversifies its economy beyond oil dependency, the introduction of corporate tax aligns with global economic standards.
Key Differences Between Corporate Tax and VAT
Corporate tax differs significantly from Value Added Tax (VAT):
- Corporate Tax: Levied on a company’s annual net profits.
- VAT: A consumption tax applied to the sale of goods and services, collected from customers at the point of purchase.
While VAT applies only when businesses surpass specific thresholds, corporate tax is mandatory for all taxable entities.
Corporate Tax Rates
- 0%: Net yearly profit up to AED 375,000.
- 9%: Net yearly profit above AED 375,000.
- 15%: For multinational companies with global revenue exceeding EUR 750 million, in line with OECD regulations.
Who Must Pay Corporate Tax?
Corporate tax applies to:
- UAE-based corporations and legal entities.
- Individuals conducting business activities in the UAE.
- Foreign entities with a Permanent Establishment in the UAE.
Exemptions:
Certain entities are exempt from corporate tax, including:
- Governmental and public entities.
- Charities and social organizations (with MOF approval).
- Businesses in natural resource extraction (already subject to Emirate-level taxation).
- Public and private pension funds.
- Real estate and regulated investment funds.
Free Zone Entities
Businesses in Free Zones can qualify for a 0% tax rate if they meet the following conditions:
- Generate qualifying income.
- Maintain economic substance within the Free Zone.
- Avoid non-qualifying activities.
Tax for Freelancers
Freelancers are subject to corporate tax once their annual revenue exceeds AED 1 million. Freelancers must hold a valid professional license to operate in the UAE.
Corporate Tax for Groups
Businesses meeting specific criteria can form a Tax Group to be taxed as a single entity. Key requirements include:
- Unified fiscal year and accounting practices.
- At least 95% ownership, voting rights, and profit share within the group.
Registration and Filing
Businesses must register for corporate tax via the Federal Tax Authority (FTA) website. Required documents include trade licenses, Emirates ID, financial records, and details of business activities. Upon approval, the company receives a Tax Registration Number (TRN).
Corporate tax returns must be filed annually, accompanied by financial statements adhering to International Financial Reporting Standards (IFRS).
Tax Deductions
Eligible deductions include:
- Business expenses incurred to generate taxable income.
- Interest expenses (subject to caps).
- Employee entertainment costs (up to 50%).
- Charitable donations to MOF-approved organizations.
Conclusion
The UAE’s corporate tax framework is designed to align with international standards while supporting the local business environment. With exemptions and favorable rates for qualifying businesses, this policy encourages compliance and economic diversification. For seamless registration and compliance, seek expert guidance.