Corporate Tax Services
Navigating UAE's Corporate Tax- A Comprehensive Overview
The United Arab Emirates is renowned for its prosperity, opportunities, and favourable tax policies. In a significant development, the UAE government introduced corporate tax in June 2023, termed "Corporate Income Tax." This tax targets a company's net profits or income, encompassing all legal entities and commercial ventures. A noteworthy exception to this corporate tax rule pertains to activities related to natural resource extraction, which are subject to distinct emirate-specific levies. Partner with Fortius to get accurate guidance with corporate tax services and seamless interactions with tax authorities.
A Brief Introduction to the UAE Corporate Tax
Corporate taxes serve as a strategic alignment with the global business landscape, aiming to diversify revenue sources. For UAE business owners, this corporate income tax framework presents promising opportunities. Designed to encourage tax compliance, it promises rewards for entities and individuals upholding tax responsibilities. The corporate tax system aims to:
Simplify compliance for UAE companies.
Utilise the extensive double tax treaty network of the UAE.
Discourage deceptive tax practices.
Elevate global fiscal transparency standards.
The UAE's move towards corporate income tax underpins its progressive approach, nurturing a vibrant business environment while upholding international benchmarks.
What Does Corporate Taxation in the UAE Entail for Businesses?
Corporate tax regulations in the UAE are applicable to companies operating within the country holding a business licence or permit. This scope extends to taxable income from self-employment permits exceeding the AED 375,000 threshold. Covering all Emirates, these federal corporate taxes are imposed on a company's net income, subject to specific adjustments per the law.
Elaborating on the Highlighting Features of the New UAE Business Tax Landscape
Key highlights of the new UAE business tax landscape are as follows:
AED 375,000 in taxable income is exempt from corporate tax.
Businesses earning over AED 375,000 will encounter a 9% tax on the income exceeding this threshold.
Large multinational corporations with consolidated global revenues surpassing Dh3.15 billion, meeting specific criteria, face a distinct tax rate.
Corporate income tax encompasses UAE banking activities and self-employed individuals with self-employment permits or licences.
Annual online filing is mandatory for corporate taxes.
Domestic and cross-border payments fall outside the tax framework.
A tax group enables companies to file a consolidated tax return for the entire group.
Transfer pricing laws for arm's length transactions apply to UAE companies.
Compliance demands registration and periodic return filing for companies governed by corporate laws, with penalties for non-compliance.
Capital gains, individual salaries, employment-based income, and other financial aspects remain excluded from taxation.
Companies in free zones are exempt from corporation tax. However, they must register and file corporate tax reports if engaging with mainland UAE entities.
This new tax regimen may impact dual-licensed companies operating in both regions.
The takeaway
Exploring UAE's corporate taxes unveils significant changes and strategic aspects. Adapting to these highlights involves understanding exemptions, thresholds, and compliance. This reflects the UAE's commitment to global standards and a robust economy. Embracing these insights helps businesses navigate the evolving corporate tax landscape with confidence. Contact Fortius Consulting Services, specialising in corporate tax services, and grow your business without hiccups.
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