Corporate tax, also known as business profit tax or corporate income tax, is a direct tax levied on a company’s net income or profit.
Applicability of Corporate Tax in UAE
All business and commercial activities within the UAE’s seven emirates are subject to UAE Corporate Tax, with exceptions including businesses involved in mining or natural resource exploitation and individuals receiving income in a personal capacity. Government entities, charities, and regulated investment funds may also be exempt, subject to specific criteria.
Effective Date
Corporate Tax will be effective for fiscal years beginning on or after June 1, 2023.
Corporate Tax Rates
The tax rates include 0% for taxable income up to AED 375,000 and 9% on income exceeding this threshold. Multinational corporations meeting specific conditions may be subject to the OECD’s Pillar Two rules.
Income not subject to Corporate Tax
Corporate tax will not apply to certain types of income, including employee salaries, dividends, capital gains from asset ownership, and interest earned through bank accounts or savings plans.
Free Zone Corporate Tax Regime
Businesses registered in free zones can enjoy tax benefits but are subject to fulfilment of certain conditions under the UAE Corporate Tax Registration requirements.
Registration
Businesses subject to CT must complete Corporate Tax Registration In UAE, register with the FTA, and obtain a Tax Registration Number. Whether it is a new or existing entity, Corporate Tax Registration is mandatory for those falling under the scope of the law. Our team of Corporate Tax Consultants can assist with seamless Corporate Tax UAE Registration.
Filing, Payment, and Refund
Businesses should submit one tax return per tax period to the FTA & pay corporate tax due within nine months from the end of tax period. Refunds can be requested if eligible.
Documentation Requirements
Businesses must maintain financial records for compliance, with additional requirements for exempt individuals and audits for free zone persons to comply with UAE CT regime.
AMA Global Audit offers expert guidance and support to businesses at every stage of the corporate tax compliance process, ensuring adherence to regulations and optimizing tax outcomes. Our services include:
Corporate Tax Eligibility & Exemptions: Analyzing eligibility criteria and identifying potential exemptions to optimize tax obligations.
Tax Grouping Analysis: Evaluating group structures to determine tax implications and optimize tax efficiency.
Tax Implications Assessment & Advisory: Assessing potential tax implications of various business decisions and providing strategic Corporate Tax Advisory Services.
Group Company Restructuring: Assisting with restructuring initiatives to enhance tax efficiency and compliance.
Foreign Tax Optimization: Advising on strategies to optimize tax liabilities for businesses operating internationally.
Corporate Tax Registration: Assisting businesses in the Corporate Tax Registration In UAE, helping them stay compliant with UAE Corporate Tax Registration rules and timelines.
Taxable Income Computation: Calculating taxable income accurately in compliance with regulatory requirements.
Tax Return Preparation & Filing: Preparing and filing tax returns efficiently to meet regulatory deadlines.
Tax Document Preparation: Compiling and organizing necessary tax documentation in accordance with regulatory standards.
Tax Deregistration: Facilitating the deregistration process for businesses no longer subject to corporate tax obligations.
• CT Impact Assessment
The UAE has long been positioned as one of the most attractive destinations for international business due to its nil tax rates and simplified compliance. With the implementation of corporate tax in the UAE, business registrations, corporate formations, and acquisitions are expected to be impacted. An effective impact assessment requires expert input, and AMA offers tailored Corporate Tax Advisory Services and strategic planning to prepare your business for the new regime.
• CT Registration, De-Registration
With the UAE government’s introduction of corporate tax from the financial year 2023, businesses must consider both Corporate Tax Registration UAE and deregistration processes. Failing to register on time allows the FTA to register qualifying persons suo-moto. Businesses under the corporate tax net must complete Corporate Tax UAE Registration with the FTA within the prescribed timelines.
The registration under the UAE Corporate Tax law can be either voluntary by the taxpayer themselves or the FTA has the power to directly register a qualifying person under the UAE Corporate Tax law if they fail to register themselves Suo-moto, even though they might be so required. Businesses that fall under the ambit of UAE corporate tax are required to carry out registration with the FTA and obtain the Tax Registration Number within the prescribed period specified by the regulatory body.
In the event of cessation or liquidation when the business ceases to be subject to corporate tax, they are required to apply for tax deregistration. A deregistration application needs to be submitted to the FTA within three months from the date of cessation or discontinuation.
Deregistration request will be approved by the FTA only if it is satisfied that the business has filed corporate tax returns and paid due taxes and settled all the corporate tax liabilities and penalties (if any) that were due for all periods up to and including the date of cessation. If a business fails to apply for corporate tax deregistration within the timeframe stipulated by the FTA or fails to comply with the payment and filing obligations, FTA has the power to deregister the business based on the information available at its disposal.
• Tax Planning & Advisory
Tax planning should precede any major business transaction to avoid unexpected losses. AMA’s Corporate Tax Consultants help you identify tax risks and offer solutions to mitigate them. For tailored advice, our Corporate Tax Advisory Services team can review your draft agreements or past transactions for compliance and strategic optimization.
In such situations, one would need to identify tax risks and find ways to mitigate them. It would be better if you could provide us with relevant draft agreements as it would help us better understand your business and, in particular, the envisaged transaction and thereby identify the relevant tax implications, and recommend ways to mitigate the relevant tax risks.
You may also discuss with our team at AMA, the transactions or deals that you have undertaken but about which you are uncertain of the tax implications. Our tax experts at AMA will identify the tax risks and recommend ways to mitigate them.
• Tax Accounting & Provisioning
Under IAS 12, businesses must assess and report deferred tax assets and liabilities. AMA’s accounting experts collaborate with the corporate tax team to ensure quarterly and annual provisioning, helping companies comply with all UAE Corporate Tax Registration and reporting obligations.
Based on the above, companies have to assess the deferred tax implications and the estimated deferred tax [Deferred Tax Assets (DTA) / Deferred Tax Liabilities (DTL)] for reporting periods, including interim reporting.
With the right approach, our team of finance and accounting professionals along with the subject matter experts from the corporate tax team will assist you in quarterly and annual tax provision calculations, reviewing tax balance sheet accounts and related deferred tax provisioning computations.
• CT Filing & Refund
The Corporate Tax Return includes income, expenses, tax liability, and required supporting documents. Filing must be completed within the timeline prescribed by law. AMA’s Corporate Tax Consultants provide complete support in filing, calculating liabilities, and requesting eligible refunds under the Corporate Tax Registration In UAE framework.
AMA has highly knowledgeable and experienced Tax consultants in UAE in assisting clients with the best Corporate Tax services in UAE for Corporate Tax returns, ensuring staying compliant with the laws and regulations of the Tax Authority. Our team will also guide you through document preparation, calculating the tax liability, and tax compliance for Corporate Tax activities such as Registration, filing returns, refunds, etc.
• CT Audit
A Corporate Tax Audit ensures businesses are compliant with all UAE Corporate Tax laws. The FTA conducts audits to confirm taxes are correctly calculated and paid. Companies that don’t comply may face penalties. AMA assists with audit preparedness, document organization, and compliance evaluation, leveraging our experience in Corporate Tax Advisory Services.
In order for the governing body to determine whether a taxable organization is adhering to the Corporate Tax law and standards as per FTA guidelines, corporate tax audits are carried out and submitted to the government. It is mandatory for all companies to adhere to this Corporate Tax Law and Audit procedures. The FTA investigates if the taxable companies have settled all debts and that all taxes are due to have been collected and paid to the authorities within the time limit specified through the tax audit. The purpose of a corporate tax audit is to ensure that companies are paying the correct amount of tax and following the regulations set by the FTA in the UAE. Companies that fail to comply with tax regulations may face Corporate Tax penalties or legal action.
