The Ministry of Finance introduce CORPORATE TAX at 9% throughout UAE for financial years commencing on or after 1st June, 2023. This tax rate is one of the best competitive tax rate all over the world.
Corporate Tax was introduced to prevent harmful tax practices and also to place UAE on the world map for TAX transparency. While entrepreneurs keep expanding and starting their entities in UAE it is necessary for them to understand the implication of UAE corporate TAX in their business. OneClik Business Setup services LLC FZ can assist you confidently navigate the CORPORATE TAX rules and regulations while finding the right solution for your company.
What is Corporate Tax in UAE?
Corporate Tax in UAE is a direct TAX levied on the additional profit after reaching a certain threshold by an entity.
- If your business works around the fiscal year, corporate tax will be applied from 1st June, 2023.
- If your business works around the calendar year, corporate tax will be applied from 1st January, 2024.
Corporate Tax Rates:
- 0% for annual taxable profit up to AED 3,75,0000–For Taxable person and Qualifying Income of Free zone Persons.
- 9% for annual taxable profit exceeding AED 3,75,0000–For Taxable person and Non Qualifying Income from Free zone Persons.
Who are Taxable Persons in UAE?
Residents in the UAE:
- Natural persons conducting booking in UAE
- Juridical person including a Free Zone
- Foreign juridical person managed and controlled in UAE
- Any other person as may be specified
Non–Residents in UAE:
- Permanent establishment in UAE
- UAE sourced income
- Nexus in the UAE
Exempt person from UAE Corporate Tax
Automatic Exemption–Corporate Tax Registration not required:
- Government Entities
- Government Controlled entities
- Extractive and Non–extractive natural resource business
Exemption against Application–Corporate Tax Registration require:
- Public pension or social security fund
- Private pension or social security fund
- Qualifying Investment fund
Small businesses with revenue below a certain threshold can claim SMALL BUSINESS RELIEF and can be treated as having no taxable income during the relevant tax period.
Qualify Income for Free zones:
The Free Zone person needs to meet all the following conditions in order to qualify for 0% Corporate Tax Rate-
- Derives qualifying income
- Maintains adequate substance in UAE
- Complies with all transfer pricing regulations
- Has not elected to be subject to Corporate Tax in UAE
- Meets any other conditions as may be prescribe by the MOF
Audited Financial Statement Maintenance Requirement:
- Qualifying Free zone
- Taxable Person whose annual turnover is more than 50 million dirham
The tax payer should be attentive to maintain proper documentation from Corporate tax Perspective, should be ready of their operations to manage the compliances and reporting obligations for the corporate tax law and review their activities and assess the impact of their business for the new corporate tax law in UAE.
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