UAE Corporate Tax
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UAE Corporate Tax
The UAE Ministry of Finance (MoF) on 31st January 2022, had announced the introduction of the Federal Corporate Tax (CT) on business profits effective for financial years starting on or after 1 June 2023. After the issuance of a Public Consultation Document and a series of discussions, on 9th December 2022, the much-awaited Corporate Tax Law (Federal Decree Law No. 47 of 2022 on Taxation of Corporations and Businesses) was officially published by the Federal Tax Authority (FTA).
CT Landscape
- Jan 2022– Announced introduction of Corporate tax law
- April 2022– MoF issued PCD inviting feedback on proposed law
- May 2022– All Inputs under PCD given by 19-05-2022
- Dec 2022– Federal Decree on CT released
- June 2023– Effective date of CT in UAE
Key Takeaways
Resident Taxable Person: A resident taxable person shall be subject to UAE CT on its worldwide income, and includes the following persons:
- Juridical persons incorporated in the UAE (includes a Free Zone Person);
- Foreign juridical persons having POEM in UAE;
- Natural persons who conduct business/business activity in UAE;
- Any other person as may be specified.
Non – Resident Taxable Person: A Non-resident taxable person is defined as a person who is not considered a Resident Person AND either:
- Has a PE in the UAE;
- Derives UAE sourced income;
- Has a nexus in UAE
CT Rate
A Taxable Person must file the CT Return and make the tax payment (if any) to the Authority within 9 months from the end of the relevant tax period.
All taxable persons shall be required to register for CT, except:
- A Govt. entity (unless it becomes a taxable person);
- A Govt. controlled entity (unless it becomes a taxable person);
- A Person engaged in an Extractive Business that meets prescribed conditions (unless it becomes a taxable person);
- A Person engaged in a Non-Extractive Natural Resource Business, that meets prescribed conditions (unless it becomes a taxable person);
- A Non-Resident Person that derives only State Sourced income (as defined in the CT Law) AND does not have a PE in the UAE.
CT shall be computed at 0% on the taxable income up to AED 375,000 and at 9% on the taxable income exceeding AED 375,000.
In case of Free Zone Persons who have substance in the UAE, derive ‘Qualifying Income’, does not elect to be subject to normal regime and fulfill the other prescribed conditions to become a ‘Qualifying Free Zone Person’, they shall be subject to CT @ 0% on their Qualifying Income and @ 9% on Non-Qualifying Income. Such persons may, however, elect to be subject to the normal tax regime.
The CT Law has defined certain persons as Exempt for CT purposes, such as Government Entity or Government Controlled Entity businesses engaged in extraction & exploitation of UAE natural resources, businesses engaged in non-extractive natural resource business, qualifying public benefit entities, qualifying investment funds etc., subject to the fulfilment of the prescribed conditions.
CT Consultancy Services We Offer:
- CT registration and de-registration service
- CT impact analysis and assessment
- CT implementation
- CT return filing service & voluntary disclosures
- CT advisory service
- CT training
- FTA audit assistance
- Special applications (exempt person, private clarifications, annual declarations etc.)
- CT implementation & compliance health check
- Advisory support for Advance Pricing Agreements
- Transfer Pricing advisory & compliance
Ready to stay fully compliant with UAE Corporate Tax and avoid costly penalties?
You may also write to us : info@kaa.ae