Corporate Tax in UAE

The net profit of enterprises and some other organizations each year is subject to a direct tax, Corporate Tax.

The UAE Ministry, in its January 31, 2022, announcement, stated that federal corporate tax was to be implemented from financial years starting from June 1, 2023.

The tax is calculated from a company’s accountancy net profit after making certain adjustments as specified in the UAE Corporate Tax legislation.

The corporate tax rates in the UAE are charged as follows:

The following UAE corporate tax rates will be charged on taxable profits and revenues, as the Ministry has stated:

For example, if a company earns a taxable profit of AED 400,000 during a financial year:

AED 0 of taxable profit up to AED 375,000 at 0% = AED 0.

That amount of the taxable profit over AED 375,000 (AED 400,000 – AED 375,000 = AED 25,000) at 9% is AED 2,250.

Corporate Income Tax in UAE is applicable to which businesses?

Corporate tax in the UAE is imposed upon specific enterprises in the country. UAE is not a tax-friendly country, yet no tax is levied on most companies at all. Corporate tax could be levied on industries like oil and gas, banking, and communications. It becomes incumbent upon companies to understand their taxes and adhere to all the legal procedures accordingly.

We at Ace Consultants have extensive experience in offering end-to-end tax solutions for businesses operating in the UAE. Our expert professionals offer customized advice and consultancy on corporate tax matters, which enables businesses to easily traverse the complexity of tax legislations and maximize their tax efficiency. With our expert advice and customized support, we enable organizations to save taxes, reduce costs, and gain peace of mind with regard to compliance.

Do all UAE companies need to register for Corporate Tax?

All businesses, whether in free zones or otherwise, must register for the corporate tax in the UAE except for natural resource extraction activities. Personal income that accrues from jobs, property, or investments, or is received without a business license, is exempt from UAE corporate tax.

Ace Consultants provides full assistance for corporate taxation services in the UAE, including:

1. Strategic Development and Tax Planning: Study the organization’s structure and operations to devise tax-efficient strategies that minimize corporate tax liability in alignment with UAE tax policies.
2. Tax Filing and Compliance: Assistance with calculating, preparing, and filing UAE corporate tax returns with complete adherence to UAE laws and deadlines.
3. Transfer Pricing Compliance: Develop and maintain transfer pricing policies in accordance with UAE tax registration compliance, and conduct all related-party transactions in good faith.
4. Tax Audits and Inspectors: Represent the company for tax audits and inspections, liaise with UAE tax authorities, and provide documentation for an easy process.
5. Tax Credits and Incentives: Identify government tax credits, incentives, and benefits that can be utilized in order to lessen corporate tax burden and enhance savings.
6. Taxation of Mergers and Acquisitions: Provide the expertise related to the tax implications of mergers, acquisitions, or restructuring, with full adherence to UAE corporate taxes in accordance with UAE corporate taxation legislation.
7. International Tax: Provide guidance in relation to international tax compliance matters, including foreign tax credits, cross-border compliance and international tax planning for businesses having global operations.
8. Tax Law Compliance Updates: Provide businesses with updates related to changes in UAE tax laws that may impact the tax strategy, business and compliance record.
9. Risk Management and Avoidance Tax Exposure: Recognize tax risks and assist in providing solutions for tax exposure while complying with UAE regulations.
10. Tax Disputes: Represent the company in relation to a tax dispute.
11. Customized Solutions: Offer services that are industry-, company size-, and company structure-specific to aid in applicability and productive output.

With the help of Ace Consultants, businesses can be confident in navigating the complex UAE corporate tax landscape, stay completely in line with the law, maximize tax planning, reduce risks, and improve overall financial position.