UAE Corporate Tax

Corporate Tax in UAE

A competitive CT regime based on international best practices will cement the UAE’s position as a leading global hub for business and investment, and accelerate the UAE’s development and transformation to achieve its strategic objectives.

Introducing a CT regime reaffirms the UAE’s commitment to meeting international standards for tax transparency and preventing harmful tax practices

Corporate tax is a form of direct tax levied on the net income or profit of corporations and other entities from their business. In UAE Federal Tax Authority (FTA) will be responsible for the administration, collection and enforcement of the CT.

FTA will soon provide more references and guides about corporate tax and information on how to register and file returns on its website.

As per Ministry of Finance, CT rates are:

0 per cent for taxable income up to AED 375,000
9 per cent for taxable income above AED 375,000 and
A different tax rate (not yet specified) for large multinationals that meet specific criteria set with reference to 'Pillar two' of the OECD Base Erosion and Profit Shifting Project.

Free zone businesses will be subject to UAE CT, but the UAE CT regime will continue to honour the CT incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE.

A business established in a free zone will be required to register and file a CT return. A Free Zone Person can benefit from a 0% CT rate on income earned from transactions with businesses located outside of the UAE, or from trading with businesses located in the same of any other Free Zone. The 0% CT rate may also apply to income from certain regulated financial services directed at foreign markets.

Dividends and capital gains of qualifying shareholding will be exempt from tax. A qualifying shareholding refers to an ownership interest in a UAE or foreign company that meets certain conditions.
Qualifying intra-group transactions and reorganizations will not be subject to CT.
Information on other UAE CT exemptions and exclusions will be provided.

A UAE resident group of companies will be able to nominate to form a tax group, capable of being treated as a single taxable person if the parent company holds at least 95% of the share capital and voting rights of its subsidiaries.

To form a tax group, neither the parent company nor any of the subsidiaries can be an exempt person or a free zone entity benefitting from the 0% CT rate, and all group members must use the same financial year. For other groups of companies which do not meet the 95% threshold, the CT regime will allow the transfer of losses between group companies, provided that they are at least 75% commonly owned.

Impact assessment of Corporate Tax on business and applicability thereto.
Analysis of the impact of Corporate Tax on Free Zone entities.
Advise on whether any exemption can be availed.
Advise on Group Corporate Tax and how to minimize potential risks.
Assist in restructuring the business/operational model from the Corporate Tax.

Advise on availing Foreign Tax Credit paid by taxpayers in other countries.
Advise on Transfer Pricing and Withholding Taxes.
Assist in registration for Corporate Tax before the relevant authorities.
Computation of taxable income and filing of Corporate Tax returns in UAE.
Preparing the written submissions to be furnished before tax authorities.
Assisting in filing the response against the notices received from tax authorities.

UAE Corporate Tax

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