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Corporation Tax Introduction

All businesses and individuals conducting business activities under a commercial license in the UAE will be subject to Corporation Tax

The UAE Corporation Tax also extends to businesses engaged in:

  • Real Estate Management
  • Consulting Services
  • E-commerce and digital companies
  • F&B businesses

Determining the amount of Corporation Tax is due on Profits

The taxable profit subject to corporation tax will be calculated from the accounting net profit of a business after making deduction for certain items as per Corporate Tax law.

The acceptable accounting net profit of a business is normally reported in the audited financial statements prepared according to IFRS (International Financial Reporting Standards).

Free Zones and Corporation Tax 

Businesses operating in Free Zones will be subject to UAE Corporation Tax, but the UAE Corporation Tax regime will continue to apply incentives offered to free zone businesses (providing they comply with the regulatory requirements and do not conduct business with mainland UAE). 

Entities operating in Free Zones will be subject to a 0% CT rate on their taxable income. If an entity located in a Free Zone derives non-passive income from mainland UAE all its income will be subject to the general CT regime. 

Passive income can be loosely defined as income that continues to be earned after some initial work, and that requires little-to-no daily effort to maintain.

A Free Zone Person that meets all of the following conditions:


1. Maintains adequate substance in the State.
2. Derives Qualifying Income
3. Has not elected to be subject to Corporate Tax
4. Complies with Articles 34 (Arm’s Length Principle) and 55 (Transfer Pricing Documentation)

Other Exemptions 

Businesses engaged in the extraction of natural resources are exempt from Corporation Tax as these businesses will remain subject to the current Emirate level of Corporate Taxation. 

Dividends and Capital Gains earned by a UAE business from its qualifying shareholdings will be exempt from Corporation Tax. 

A list of other exemptions

  • Interest and other income earned by an individual from bank deposits or saving schemes.
  • A foreign investor’s income earned from dividends, capital gains, interest, royalties and other investment returns.
  • Investment in real estate by individuals in their personal capacity.
  • Dividends, capital gains and other income earned by individuals from owning shares or other securities in their personal capacity.

Individual Taxation

An individual will be required to pay UAE Corporation Tax if they hold a business license or permit. Holding a license or permit for business operation purposes places the individual’s money-making activities on an equal level to licensed businesses.  If the individual is not required to have a business license or permit, then the activity is not considered a business.

 

If an individual operates as a legal entity then the activities they are engaged in will be considered the operations of a business. Activity such as trading assets, real estate, stocks, and cryptocurrency - would be considered a business activity and thus subject to UAE Corporation Tax.

Tax Filing and Administration

All taxpayers will be required to register before filing the first Corporate Tax Return, and obtain a Corporate Tax Registration Number.

Taxpayers will be able to electronically register for UAE CT through the website of the Federal Tax Authority.

Only one UAE CT return will need to be filed per Tax Period. The CT return will generally be due within 9 months following the end of the Tax Period. No provisional or advance UAE CT filings will be required.

Key contact

Rayhan Aleem, Founder and Managing Partner, Alpha Pro Partners
Rayhan Aleem
Managing Partner of Alpha Pro Partners

What is Group Relief?

Group relief is a relief from Corporate Tax. Businesses are able to create tax groups under the UAE corporate tax framework, which will go into force in June 2023.

Corporate Tax for Small Business

From the 1st of June 2023, the corporate tax rate will be 9% of net profits made by businesses in the UAE.

In order to support small businesses and start-ups, the corporate tax rate will be 0% of profits is up to the threshold of AED 375,000.

Small Business Compliance Checklist

The new UAE Corporate Tax regime will require businesses to have comprehensive accounting and bookkeeping in place.

Our consultants and partners will work with you to support your compliance requirements using our comprehensive checklist.

Do I need to Comply with Transfer Pricing Rules?

Transfer pricing refers to the prices of goods and services that are exchanged between companies under common control.

Do I need to Pay Foreign Tax and Double Taxation?

Under the upcoming UAE Corporate Tax regime, foreign companies will be subject to the corporate tax rate of 9% on annual taxable income exceeding AED 375,000.

Corporate Tax application on Freezone companies

On 09 December 2022, the Ministry of Finance released Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. This law included the treatment of businesses on freezones as well as the mainland.

What’s a Rich Text element?

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Supporting Small Businesses in the UAE with Registration, Consultation and Corporate Tax Filing

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We care about your business

We Care

You have put your blood, sweat and tears into your business and you deserve a partner who understands. Our promise is that we will treat your business like our own.

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We are Xero Platinum Partners and are experts in using Xero. Xero is continuously making improvements and enhancements to its software and we believe it's the best accounting software available for your operational and accounting needs.

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Supporting your business with accounting, bookkeeping, and software implementation tasks

Supporting your Growth

In 2021, we supported our clients to grow their revenues by 98%. We work with 100’s of diversified clients and advise them on sustainable growth strategies.

UAE Corporation Tax Complian With Xero Experts

Key Highlights on UAE Corporation Tax 

  • UAE Corporation tax rate one of the lowest within the GCC region and along major economies
  • Tax applicable on profits above AED 375,000 and not below that
  • Standard Corporate Tax Rate is 9%
  • CT effective from 1 July 2023 from financial year 2023 ending on 30 June 2024
  • The financial year for businesses starting 1 January 2023 and ending 31 December 2023 will become subject to the tax beginning from 1 January 2024
  • Tax incentives offered to freezone businesses complying with all regulatory requirements will remain
  • Capital gains and dividends received by the companies in UAE from their qualifying shareholdings are also exempt from paying CT.
We care about your business

We Care

You have put your blood, sweat and tears into your business and you deserve a partner who understands. Our promise is that we will treat your business like our own.

Xero experts

We are Xero Platinum Partners and are experts in using Xero. Xero is continuously making improvements and enhancements to its software and we believe it's the best accounting software available for your operational and accounting needs.

Xero Accounting Software Experts
Supporting your business with accounting, bookkeeping, and software implementation tasks

Supporting your Growth

In 2021, we supported our clients to grow their revenues by 98%. We work with 100’s of diversified clients and advise them on sustainable growth strategies.

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