Corporate Tax for Businesses in the UAE
What is Corporate Tax?
Corporate tax (CT) is a form of direct tax levied on the net income or profit of corporations and other entities from their business. Corporate Tax is sometimes also referred to as “Corporate Income Tax (CIT)” or “Business Profits Tax” in other jurisdictions.
Introduction of Corporate Tax in the UAE
The UAE introduced the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) on January 31st , 2022. Effective from June 1st , 2023, this law establishes a Federal Corporate Tax regime aimed at supporting the UAE’s strategic objectives and enhancing its position as a global business hub. By adhering to international standards and incorporating recognized principles, the UAE aims to provide clarity and transparency in its Corporate Tax regime, strengthening its appeal for business and investment.
To whom is Corporate Tax Applicable?
The Federal UAE CT Law, which is effective for each taxable person’s new financial year beginning on or after 1 June 2023, will be applicable across all Emirates and will apply to all business and commercial activities, except to the following exempt persons (subject to conditions):
- UAE government entity.
- UAE government-controlled entity.
- Person engaged in an extractive business in the United Arab Emirates.
- Person engaged in a non-extractive natural resource business in the United Arab Emirates.
- Qualifying public benefit entity.
- Qualifying investment fund.
- Public pension or social security fund, or a private pension or social security fund that is subject to regulatory oversight of the competent authority in the state and that meets any other conditions that may be prescribed by the Minister.
- A juridical person incorporated in the state that is wholly owned and controlled by certain exempt persons.
- Any other person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister.
For Immediate assistance for Corporate Tax get in touch with us on:
Email: contact@itc-tax.com
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Corporate Tax Registration
Self Assessment Tool
Take the assessment and check if your business has to register for Corporate Tax.
Disclaimer : These questions are tailored for establishments based in the UAE. If you’re outside the UAE, you’ll have a different set of criteria and questions. Reach out to us for more details. This quiz is designed for basic conditions, simplifying tax obligations, and may not cover all specifics.
Frequently Asked Questions
Every Taxable person, including Free Zone person, needs to register for Corporate Tax and get a Registration Number.
Yes, every company in the UAE, regardless of exemption status, is required to file a tax return. This is essential to demonstrate compliance with Corporate Tax regulations.
All Free Zone companies must register, maintain proper accounting records, and file tax returns. Specific eligibility criteria must be met for a Free Zone business to qualify for an exemption.
The Corporate Tax rates in the UAE are structured as follows:
- 0% for taxable income up to AED 375,000
- 9% for taxable income exceeding AED 375,000
Different tax rates may apply to large multinational enterprises based on OECD Pillar Two criteria. There are also companies that are exempt from Corporate Tax.
The financial year for most companies in the UAE begins on January 1, 2024, aligning with the full implementation of Corporate Tax. However, there are companies that have started their financial year from 2023 Onwards, hence Corporate Tax will be accordingly applicable for the respective financial year.
It is recommended to adhere to International Financial Reporting Standards (IFRS) for their accounting practices. However, specific standards may apply based on the size and nature of the business.
Businesses in the UAE will have up to 9 months from the end of the relevant tax period to submit their tax return and pay the Corporate Tax to the Federal Tax Authority (FTA)
Non-compliance with Corporate Tax regulations in the UAE can result in penalties, fines, and legal actions. It is important for businesses to ensure they are in full compliance with tax laws to avoid such consequences.
The Federal Tax Authority (FTA) is the regulatory body responsible for the administration, collection, and enforcement of Corporate Tax in the UAE.
Certainly, ITC Tax Consultancy helps businesses get ready for corporate tax, ensuring they understand and follow the Corporate Tax rules to remain in compliance.
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