BETA
Corporate Tax
The introduction of Corporate Tax in the UAE marks a significant development.
Commencing with the introduction of Value Added Tax (VAT) in January 2018 and followed by the implementation of economic substance rules (ESR) and Country-by-Country Reporting (CbCR) regulations in April 2019, the UAE has undergone a series of tax reforms in recent years to align itself with international markets and diversify its revenue.
CORPORATE TAX
TAXATION & COMPLIANCES
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Companies with fiscal years starting on June 1, 2023, and ending on May 31, 2024, will be subject to CT from June 1, 2023, with their first tax return likely due by late 2024.
Effective Date:
Companies with fiscal years starting on January 1, 2023, and ending on December 31, 2023, will be subject to CT from January 1, 2024, with their first tax return likely to be due towards mid 2025.
The CT will be applicable for financial years starting on or after 1 June 2023.
Who is Obliged to register for VAT in UAE?
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All entities and individuals engaged in commercial activities under a UAE commercial license.
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Free zone enterprises (Free zone businesses in compliance with regulatory requirements and not operating in the UAE mainland will continue to enjoy CT incentives).
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Foreign entities and individuals if they regularly conduct trade or business activities in the UAE.
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Banking operations.
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Companies involved in real estate management, construction, development, agency, and brokerage service.
CT will be applicable to:
Note: Individuals will not be subject to corporate tax. As a result, any income from employment, real estate, investments in shares, and other personal income unrelated to a trade or business in the UAE will be exempt from corporate tax.
How the CT in UAE is calculated?
Corporate tax in UAE is calculated at 9% of the net profit shown in the company's financial statements. The 9 % corporate tax will be levied only if the taxable net profit exceeds 375,000 AED.
In other words, a net profit of up to 3,75,000 AED is taxed at 0%.
For example, If the net profit is 10,75,000 AED, the corporate tax will be 63,000 AED (10,75,000-3,75,000 X 9/100).
Documentation Requirements:
A business will be required to maintain financial and other records that explain the information contained within the CT return and other documents submitted to the FTA. Certain exempted persons will also be required to maintain records to allow the FTA to ascertain the person’s exempt status.
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Return Filing Due date:
Each of the tax returns and related supporting schedules will need to be submitted to the FTA within 9 months of the end of the relevant Tax Period.
With a team of seasoned experts who are well-versed in offering tax and compliance services in the UAE, Hyperbridge offers a cluster of related services that include:
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CT Impact Assessment
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CT Advisory
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CT Implementation Support
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CT Compliance
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Audit Assistance
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Representation before Tax Authorities
