The Decision was taken keeping in view the OECD guidelines to keep the global minimum corporate tax (CT) rate at 15%. To guarantee equitable practices, the corporate tax in UAE rate has been determined. The CT is 0% for people with taxable income up to AED 375,000 and 9% for those with incomes over that amount.

For huge corporations like big MNCs that satisfy the requirements established by the government, a separate tax rate – which will be set to 15% of the corporate income. It will be imposed on a qualifying free zone person at 0% on qualifying income and at 9% on taxable income that is not qualifying income according to the law.

The demands of people, companies, and the nation as a whole have all been taken into consideration while setting the corporate tax in UAE. Additionally, a lengthy window has been provided for the enterprises to file their tax filings.

The UAE corporation tax will be applicable to all business operations carried out in the UAE after obtaining a license. This includes all kinds of licenses required for you to do your business legally in Dubai including the freelance license in Dubai as well. The “qualifying free zone persons” will be charged the corporate taxes at the rates mentioned according to the government guidelines.

The Federal Tax Authority will impose, collect, and manage the Corporate Tax in UAE. It will hasten the nation’s prosperity during the following 50 years. It is a first step toward a sustainable future with a strong economy and one that is not dependent on oil. 

All UAE Business entities must register with the FTA for the taxation, even if they are exempted from the CT with their corporate Income below the threshold of 375,000 AED.

Businesses that rely on the extraction of natural resources are, however, excluded from the new UAE corporate tax. The corporate tax exemption will also apply to capital gains from qualifying ownership, qualifying intra-group transactions, and qualifying re-organisation. Government authorities will release a list of exempt free zones in Dubai as well.

Additionally, individual salaries and other work perks are exempt from the CT. Besides this, it has been decided to exempt from paying corporate tax the interest and income from real estate.

While there will be various “executive resolutions” from various cabinets, it should be emphasised that the personal income of an individual will not  be subject to taxation under this regulation regardless of whether their personal income comes from the UAE or from outside.

The only taxable corporate income that residents and non-residents will pay taxes on comes from sources based in the United Arab Emirates. A person’s residency will be determined in accordance with the conditions outlined by the authorities. They won’t be charged the corporate tax if these criteria don’t allow them to be considered a resident.

Businesses that have multiple companies in the Emirates, can be considered as a “Tax Group” after getting FTA’s approval. In cases of a tax group, intra-company transactions are tax free. They are viewed as a single entity for tax purposes. They must adopt the same accounting principles and fiscal year when putting up their financial statements. To create a tax group, two or more people must fulfil the legal requirements.

It should be emphasised that an exempt person or a qualified free zone cannot be a part of the tax group. Through subsidiaries, the ownership, rights, and entitlement may be held directly or indirectly.

The major benefit of forming a tax group in the UAE is that the company shall be considered as a single entity for tax purposes. The company will therefore be paying taxes together as a single taxpayer.

• Parent company holds at least 95% of the share capital and voting rights of its subsidiaries 
• Neither parent company nor any of the subsidiaries are exempt persons or a free zone person
• All group members should have the same financial year 
• Branches may be part of the tax group where it is owned by the parent company or any subsidiary.

• .A company tax registration number must be obtained by all the businesses, whether they are subject to taxation or not.
• The taxable people shall file a corporation tax return. Within nine months after the end of the tax period, this must be completed.
• VAT and Corporate Tax (CT) must be paid separately if you are registered for VAT; nevertheless, even if your company is not registered for VAT, you may still be required to pay Corporate Tax. Both taxes, which are entirely distinct from one another, are still in effect in the UAE.
• The implementation of Corporate Tax in UAE will not result in the elimination of VAT or excise tax in the nation. All of the UAE’s Emirates will also be subject to the tax. Understanding the regulations and every other element of your business will be helpful when applying for the Corporate Tax.
• The Federal Tax Authority has asked everyone to study the information on the company tax law and other supporting material available on the official government websites.
• You may use the same to examine the situation and decide if your company must pay corporation tax or not.
• To keep up with any current changes or additions to the legislation, everyone should frequently visit the websites or get in touch with us.

Our team of Accounting & Tax experts with the knowledge & understanding of the UAE compliance & accounting laws will ensure that your company abides by the regulatory norms. The tax law is still being formulated. This ongoing process has caused a lot of changes in the earlier formulated laws and will further cause more changes. Keeping up with these changing laws can be hassle-some. 

We will help you take care of your tax registration whether it is VAT or corporate tax.Contact our experts to get started today.