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A Comprehensive Guide for Businesses - Navigating Corporate Tax in the United Arab Emirates

A Comprehensive Guide for Businesses: Navigating Corporate Tax in the United Arab Emirates

In the United Arab Emirates (UAE), corporate tax is a substantial component of the tax system and is essential to the government’s ability to raise  economy. This page offers a thorough overview of UAE corporate tax, covering its definition, function, legislation, and regulations.

According to the Federal Decree law no 47 of 2022 on the taxation of corporations and businesses, the headline rate of 9% under the Corporate Tax Law will go into effect on June 1st, 2023. The regime has elements that adhere to the highest standards of international taxation. Businesses that operate in many strategic sectors are eligible for a number of exemptions.

In the UAE, certain categories of firms must register for corporate tax. This comprises:

  • UAE corporations and other legal entities that are incorporated in the UAE or that are effectively managed and governed in the State
  • Natural persons (individuals), who carry on Business or Business Activity in the UAE having annual turnover of AED 1 million or above;
  • Foreign legal entities that do not reside in the UAE but have a permanent establishment in the State

To ensure compliance with corporation tax regulations, these businesses must meet their registration requirements.

The following steps are included in the corporation tax registration process in the UAE:

Step 1: Register for an account on the Emaratax portal using your email address and phone number, or sign in using your ID and password already in place.

Step 2: Create your taxable person in step 2 or choose the appropriate taxable person from the list of taxable persons.

Step 3: The option to register for corporate tax will be available. Please choose this choice to finish the registration process.

A period of 26 months (until 28 February 2025) is available for registration for taxpayers whose fiscal year ends on May 31. A 33-month registration period is provided for taxpayers whose fiscal year ends on December 31 (that is, until September 30, 2025).

Penalties may include Jail term and/or fines up to a specific multiple of the unpaid tax amount are possible penalties. Depending on the violation, it could be either in some cases or both.

Government entities, entities under the control of the government, extractive and non-extractive natural resource companies, qualifying public benefit entities, qualifying investment funds, public pension or social security funds, or private pension or social security funds are exempt from corporate tax.

Individuals and organizations must understand the tax rules and regulations, submit their tax returns accurately and on time, and keep accurate and thorough records of their activities in order to remain compliant.

Businesses operating in the UAE must be aware of and compliant with the country’s corporate tax rules and regulations. An introduction of corporation tax, registration procedures, due dates, fines for non-compliance, exemptions, and tax relief possibilities have been presented in this thorough reference. Businesses can operate legally, meet their commitments, and support the expansion and development of the UAE economy by adhering to corporate tax regulations.

This article was published on  09 June 2023

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