UAE Corporate Tax
What is Corporate Tax?
Corporate tax is a tax on the business income of an entity. It is similar to individuals paying income tax. Many countries impose such taxes at national and state levels. Corporate Tax is a tax imposed on corporations and businesses operating in the United Arab Emirates (UAE). It is governed by the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law).
Why is the UAE introducing Corporate Tax?
The UAE aims to diversify its revenue sources and enhance fiscal sustainability by implementing Corporate Tax
When is the UAE Corporate Tax regime effective?
The Corporate Tax regime became effective on December 9, 2022.
Who is subject to UAE Corporate Tax?
Both natural persons and juridical persons are subject to UAE Corporate Tax.
Will UAE entities owned by UAE or GCC nationals be subject to UAE Corporate Tax?
Yes, they will be subject to Corporate Tax.
Will I have to pay UAE Corporate Tax alongside Emirate level taxes?
Yes, Corporate Tax is separate from other local taxes.
What will be the role of the Federal Tax Authority?
The Federal Tax Authority will administer and enforce the Corporate Tax Law.
What should I be doing to prepare for UAE Corporate Tax?
Businesses should assess their tax obligations, maintain proper records, and seek professional advice from Tax Experts like ProAct Chartered Accountants.
What are the UAE Corporate Tax rates?
- Natural persons and juridical persons: 0% for Taxable Income up to AED 375,000, and 9% for Taxable Income exceeding AED 375,000.
- Qualifying Free Zone Persons: 0% on Qualifying Income, and 9% on Taxable Income that is not Qualifying Income 1.
What is the tax period for UAE Corporate Tax?
The tax period is typically one calendar year, starting from January 1st and ending on December 31st.
What is Taxable Income for UAE Corporate Tax?
Taxable Income includes all revenue, profits, and gains derived from business activities, subject to certain exemptions and deductions.
Are there any exemptions from UAE Corporate Tax?
Yes, certain entities and activities are exempt from Corporate Tax, including sovereign entities, foreign branches, and certain investment funds.
How do I calculate my Corporate Tax liability?
Calculate your Taxable Income, apply the relevant tax rate, and consider any exemptions or deductions. ProAct Chartered Accountants can help you with your calculations.
What are the penalties for non-compliance with UAE Corporate Tax?
Penalties include fines for late filing, incorrect information, and failure to maintain records.
Can I appeal a tax assessment or decision?
Yes, taxpayers have the right to appeal decisions made by the Federal Tax Authority.
What are the reporting requirements for UAE Corporate Tax?
Businesses must submit annual tax returns and maintain proper records for at least five years.