Must Know
Every business in the UAE must do these three things to comply with the new corporate tax scheme:
1. Register for corporate tax from June 2023 onwards.
2. Keep accounting records up to the required reporting standard (e.g. IFRS).
3. File a corporate tax submission with the Federal Tax Authority.
While not all businesses have to pay corporate tax, every business must still register and comply with these steps to verify whether they qualify for a tax exemption.
Corporate tax advice
Our experts will advise you on all corporate tax considerations which might impact your business. This will include what tax exemptions could be available to your business and how to benefit from these.
Corporate tax registration
Our team will assist in registering your business for corporate tax with the FTA and manage the deadlines for all of your corporate tax obligations.
Corporate tax returns
Our team will assess your corporate tax position, ensure the best tax outcome for your business, and file all necessary submissions with the FTA throughout the year.
Corporate Tax in the UAE
Corporate tax is levied on the net profit of businesses in the UAE. Introduced on June 1, 2023, it applies fully to most companies from January 1, 2024.
Who is Subject to Corporate Tax?
All UAE businesses, including free zone companies, must pay corporate tax, except for specific exemptions.
Corporate Tax Rates:
- 0% for businesses earning up to AED 375,000 annually.
- 9% for profits exceeding AED 375,000.
- 15% for large multinational companies with global revenue over EUR 750M.
Key Differences: Corporate Tax vs. VAT
- Corporate Tax: Levied on business profits.
- VAT: Charged on goods/services and paid by consumers.
Exemptions:
- Government entities.
- Businesses engaged in natural resource extraction.
- Charitable organizations.
- Certain investment funds and pension funds.
Tax Filing & Registration:
- Businesses must register with the FTA and file tax returns annually.
- Financial reports must be submitted within 9 months of the fiscal year-end.
Special Cases:
- Free Zone Entities: Eligible for 0% tax under certain conditions.
- Freelancers: Subject to tax if revenue exceeds AED 1M annually.
- Corporate Groups: Can form a Tax Group for simplified reporting.
For hassle-free tax registration and compliance, our team can assist you through the FTA registration process.
Probable Implications of Corporate Tax UAE
The introduction of corporate tax will help the UAE economy become more diversified and sustainable in the long term. It will also make the country more attractive to foreign investors.
It should be noted that the UAE is not the first country in the Middle East and Gulf region to introduce corporate tax. Several countries have it already with the following rates:
- Saudi Arabia: 20%
- Oman: 15%
- Qatar: 10%
- Bahrain: 46% for a few specific sectors related to natural resource extraction, 0% for others
- Kuwait: 15%
Now, let’s take a look at the corporate tax rates of some other economic regions.
- Montenegro: 9%
- Gibraltar: 12.5%
- Ireland: 12.5%
- Liechtenstein: 12.5%
- Hong Kong: 7.5-16.5%
- Singapore: 17%
- San Marino: 17%
The UAE’s tax rate of 9% is still lower than many of the competing regional and global economies.
Wrap-Up: Corporate Tax UAE
To keep your UAE business compliant with tax policy changes, it’s essential to stay updated with the latest announcements from the UAE government. You can also seek professional help from our tax advisors to ensure your business is structured in the most efficient way to handle the corporate tax payable.