Corporate Tax – Overview

Frequently Asked Questions

Corporate Tax, also known as Corporate Income Tax or Business Profits Tax in some jurisdictions, is a direct tax imposed on the profits or net income of corporations and businesses.

No, most countries around the world, including several in the Middle East, have comprehensive Corporate Tax regimes.

The UAE Corporate Tax regime will be effective for financial years starting on or after June 1, 2023.

The UAE aims to establish a competitive Corporate Tax regime based on international best practices. This effort strives to boost the UAE’s status as a worldwide commercial and investment center, supporting its growth and strategic objectives. It also demonstrates the UAE’s dedication to preventing harmful tax practices and promoting tax transparency.

UAE Corporate Tax applies to juridical persons incorporated in the UAE, juridical persons effectively managed and controlled in the UAE, and foreign juridical persons with a permanent establishment in the UAE. Individuals are only impacted by Corporate Tax if they are directly or indirectly involved in business or commercial operations in the UAE, perhaps as a sole proprietor, member of an unincorporated partnership, or otherwise.

Yes, the UAE Corporate Tax is a federal tax that is equally applied to all of the Emirates.

No, the Value Added Tax (VAT) and Corporate Tax in the UAE are two different levies. In the UAE, both will still be applicable.

You must pay corporate tax and VAT separately if your company is registered for VAT. You could still be responsible for corporate tax even if your company is not registered for VAT.

Yes, UAE Corporate Tax is applicable regardless of the founders’ or ultimate owners’ nationality or place of residence. All legal entities incorporated, residing, or having a permanent establishment in the UAE are subject to it.

Yes, applicable service fees will still be required to be paid to the relevant Emirate and Federal Governments. Fees for business setup, license renewal, and other government charges incurred solely for the ordinary course of business are considered deductible expenses for UAE CT purposes.

No, the UAE will still impose both Corporate Tax (CT) and Excise Tax, which are separate tax forms.

UAE Corporate Tax (CT) and other federal taxes will be administered, collected, and enforced by the Federal Tax Authority. As needed for the administration, collection, and enforcement of CT, they will provide guidelines, offer explanations, and increase awareness.

For international information exchange for tax reasons as well as bilateral and multilateral tax agreements, the Ministry of Finance will continue to serve as the competent body. Additionally, they will have the power to publish new guidelines and implementation rules for the UAE CT and other federal taxes.

You should take into account the current international agreements, such as those for the avoidance of double taxation, to which the UAE is a party when interpreting the UAE CT system. The applicable international agreement may restrict the application of UAE CT if there is any inconsistency between the Corporate Tax Law and another international agreement addressing the taxation of a certain income item.

To prepare for the UAE CT regime and understand its implications for your business, you should consider the following:
  • Examine the Corporate Tax Law and go through the accompanying materials on the Federal Tax Authority and Ministry of Finance websites. Ministry of Finance and the Federal Tax Authority.
  • Utilize the available information to determine if your business will be subject to UAE CT and the effective date of implementation.
  • Familiarize yourself with the requirements of the Corporate Tax Law, including registration obligations, accounting/tax period, filing deadlines, potential elections or applications, and the impact of CT on your contractual obligations with customers and suppliers.
  • Ensure your business maintains the necessary financial information and records required for UAE CT purposes.
  • Consistently check the Federal Tax Authority and Ministry of Finance websites for changes and further information on the UAE CT regime.

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