Expand tax and businessmen services

Tax, Bookkeeping and Accounting Services in Dubai

Corporate Tax

Corporations and other entities in the UAE are subject to a direct tax on their net income or profits derived from their business activities, which is known as Corporate Tax (CT).

Expand Tax and Businessmen Services offers comprehensive Corporate Tax Services to assist businesses in the UAE to comply with the new tax regulations that came into effect on June 1, 2023. Our team of experienced professionals provides guidance and support to business owners to understand the administrative requirements such as tax registration, filing of corporate tax returns, and payment. We ensure that our clients are fully compliant with the new regulations and avoid any hefty penalties. Our Corporate Tax Services are designed to provide businesses with a hassle-free experience by taking care of all the tax-related obligations.

Corporate Tax Registration

In the United Arab Emirates (UAE), companies are required to register with the Federal Tax Authority and obtain a Corporate Tax Registration ID or number, regardless of whether they are subject to 0 percent or 9 percent corporates tax.

The FTA website states that taxable individuals are given a period of time to register, up until the date of their first tax filing. The timeline for registration is determined by the end date of the individual’s financial year. For instance, if a taxable person’s financial year ends on May 31st, they have 26 months to register, with a deadline of February 28th, 2025. Similarly, if their financial year ends on December 31st, they have 33 months to register, with a deadline of September 30th, 2025. This means that businesses in the UAE have a specific registration timeline to follow, based on their financial year end date, and must ensure that they register for corporate tax within the given timeframe to avoid penalties and legal consequences.

How can we help?
We provide expert advice and assistance in all aspects of corporate tax registration, including obtaining the necessary documentation and completing the registration process in a timely and efficient manner.

Corporate Tax Rate

The Ministry of Finance has provided updated guidelines regarding the rates at which Corporate Taxes will be imposed in the UAE. If a company’s taxable income is equal to or less than 375,000 AED, no taxes will be imposed on their Corporate Tax (CT). However, if the company’s taxable income exceeds 375,000 AED, a tax rate of 9% of the CT will be applied.

Corporate Tax will be charged on Taxable Income as follows:
  • Taxable income not exceeding AED 375,000 will be subject to 0%
  • Taxable income exceeding AED 375,000 will be subject to 9%
Qualifying Freezone Persons as follows:
  • Qualifying Income 0%
  • Taxable income that does not meet the qualifying income 9%

Qualifying Free Zone Person & Qualifying Income

A Free Zone Person who qualifies as a Qualifying Free Zone Person can enjoy a special corporate tax rate of 0% on their “Qualifying Income”.

To be eligible as a Qualifying Free Zone Person, the individual must:
  • Maintain sufficient presence in the UAE
  • Generate “Qualifying Income”
  • Not have opted to pay corporate tax at standard rates
  • Comply with transfer pricing requirements as per the Corporate Tax Law.
“Qualifying Income” refers to any income subject to Corporate Tax earned by a Qualifying Free Zone Person.

Corporate Tax Apply To:

The Corporate Tax Law imposes taxes on income using both the residence and source bases, which are dependent on the classification of the Taxable Person.

  • A “Resident Person” is taxed on income from both domestic and foreign sources (i.e. a residence basis).
  • A “Non-Resident Person” is only taxed on income obtained from sources within the UAE (i.e. a source basis).
  • Any person or company operating a business under a commercial license within the UAE is subject to corporate tax.
  • Businesses located in free zones in the UAE are also subject to corporate tax, unless they comply with all regulatory requirements and do not conduct business outside of the free zone.
  • Foreign individuals and entities are subject to corporate tax only if they engage in regular or ongoing business activities within the UAE.
  • Banks operating within the UAE are subject to corporate tax.
  • Companies involved in activities related to real estate management, construction, development, agency and brokerage within the UAE are subject to corporate tax.

Exemptions from Corporate Tax

  • Government Entities (automatically exempt).
  • Government-controlled Entities (automatically exempt).
  • Persons engaged in the non-extraction of UAE natural resources (Exempt if notified to the ministry of finance).
  • Persons engaged in the extraction of UAE natural resources (Exempt if notified to the ministry of finance).
  • Qualifying Public Benefit Entities (exempt of listed in the cabinet Decision).
  • Public Pension or social security funds (Exempt if applied to and approved by Federal Tax Authority).
  • Qualified investment funds (Exempt if applied to and approved by Federal Tax Authority).
  • A UAE company wholly owned and controlled by any of the exempt persons (Exempt if applied to and approved by Federal Tax Authority).
  • Dividends and other profit distributions received from a juridical person that is a resident person.
  • Dividends and other profit distributions received from a participating interest in a foreign juridical person subject to certain conditions.
  • Any other income from a participating interest.
  • Income of a foreign permanent establishment where an election is made to exempt this from taxation.
  • Income derived by a non-resident person from operating aircraft or ships in international transportation that meets the conditions of the CT Decree-Law.
  • Any other persons as determined by cabinet decision (Exempt if applied to and approved by Federal Tax Authority).

Deductible Expenditure

According to the Decree-Law, any expenses that are incurred solely for the purpose of the Taxable Person’s business and are not capital in nature will be deductible in the Tax Period when they occur. However, there are certain expenses that cannot be deducted when calculating the Taxable Income for a Tax Period, including:

  • Expenses not related to the Taxable Person’s business.
  • Expenses incurred in generating Exempt Income.
  • Losses that are not connected to the Taxable Person’s business.
  • Expenses that the Cabinet may specify in a decision based on the Minister’s suggestion.
Furthermore, certain expenses are non-deductible, such as:
  • Donations, grants or gifts given to an entity that is not a Qualifying Public Benefit Entity.
  • Fines and penalties (except for compensation for damages or breach of contract).
  • Bribes or illicit payments.
  • Dividends or other similar benefits paid to a Taxable Person’s owner.

Corporate Tax - Natural Person

1. What does the term “Natural Person” mean in the context of the Corporate Tax Law?
The term “Natural Person” in the Corporate Tax Law refers to an individual.

2. Will individuals be subject to Corporate Tax in the UAE?
Only individuals who engage in a business or business activity, as per a Cabinet Decision to be issued, will be subject to UAE Corporate Tax. Individuals engaged in other activities will generally be outside the scope of the Corporate Tax regime.

3. How will a sole proprietorship or civil company be treated under the UAE Corporate Tax Law?
For certain types of business activities, natural persons can form a sole proprietorship or civil company. These entities will be treated as the natural person or persons owning them for Corporate Tax purposes.

4. Will individuals be subject to UAE Corporate Tax on business income earned outside the UAE?
Yes, the taxable income of a natural person engaged in a business in the UAE will include all income derived from that business, even if earned outside the UAE, as long as it relates to the business activity conducted in the UAE.

5. Will individuals be subject to UAE Corporate Tax on income from real estate?
Generally, income earned by an individual from investing in UAE property in their personal capacity will not be subject to UAE Corporate Tax.

Corporate Tax Return Filing

The Federal Tax Authority (FTA) in the UAE mandates that businesses file a single consolidated tax return rather than multiple returns. This consolidated return must be submitted within nine months after the end of the relevant tax period. This streamlined approach aims to simplify the tax filing process for businesses and reduce their administrative burden.

Expand Tax and Businessmen Services offer expertise in e-filing tax returns, making it easier for businesses to file their consolidated tax return online. Their team of professionals understands the complexities of tax laws and regulations in the UAE and can provide hassle-free support to businesses during the tax filing process. With their help, businesses can ensure timely and accurate tax filings, avoid penalties, and reduce the risk of non-compliance.

Implementation of Corporate Tax

The implementation of Corporate Tax in the UAE has made tax compliance increasingly complex, which can be a challenge for in-house tax departments to navigate. However, businesses can supplement their efforts by utilizing the expertise of professionals at Expand Tax and Businessmen Services. We offer specialized knowledge and experience in Corporate Tax to ensure accurate transition and compliance with the regulations.

To facilitate this, Expand Tax and Businessmen Services provides a range of services such as:
1. Performing an impact analysis of the regulatory regime.
2. Evaluating the bottom-line and profit-after-tax.
3. Examining the need to modify the fiscal year, ensuring compliance with International Accounting Standards.
4. Ensuring sufficient resources for tax compliance.
5. Analyzing the company’s current methods for ensuring corporation tax compliance.

Our team of experts can help businesses assess their tax situation and develop strategies to meet the requirements of the new tax regime, reducing the risk of non-compliance and penalties.

Compliance with Corporate Tax

The constantly changing business landscape and regulatory requirements make it essential for organizations to adopt a new approach towards accounting, reporting, and taxation documentation. To address this need, Expand Tax and Businessmen Services offers a comprehensive Company Tax Compliance Program that helps businesses meet their tax compliance obligations.

The program includes services such as:
1. General compliance support
2. Corporate tax registration
3. Computation of tax payables
4. Preparation of corporate tax returns and other tax disclosure documents
5. Examination of tax returns
6. Assistance with communication with tax authorities
7. Collaboration with officials to resolve disputes

With the expertise of the professionals at Expand, businesses can achieve their tax compliance obligations and ensure a smooth transition to the recently introduced Corporate Taxes in the UAE.

Advisory / Consultancy for Corporate Tax

Expand Tax and Businessmen Services provides advisory and consultancy services to help companies to be aware of the impact of corporate tax on their business processes and ensure compliance with tax laws.

The advisory / consultancy service includes:
1. Tax preparation and compliance
2. Tax clustering and group revamping
3. Consultancy on domestic and foreign transactions
4. Withholding tax obligations
5. Permanent Establishment (PE) consultancy
6. Guidance on adherence to corporate taxes

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