Corporate Tax in UAE
UAE has imposed 9% corporate Tax (CT) from 2023 and it is essential for businesses to register for corporate Tax. If your profit exceeds AED 375,000, 9% CT will be implemented. 0% CT for the companies in UAE Free zone. Alpha Auditing provides professional corporate tax services in Dubai. With a team of approved tax agents and experienced professionals, we ensure to provide standardized corporate tax services.
Corporate Tax Rate in UAE
UAE has implemented CT or Corporate Income Tax (CIT) based on international standards. It is applied to the business having net profit above AED 375,000 or US$ 102,000. The CT rate defined in UAE is the one of the most competitive in the world as stated by the Ministry of Finance. The corporate tax rates are as follows:
- 0% for taxable income up to AED 375,000
- 9% for taxable income more than AED 375,000
- 15% tax rate for multinational and large organizations having global revenue more than AED 3.15 billion
Lear more about Documents required for Corporate Tax Registration
Corporate Tax Exemptions
There are various types of entities exempted from CT. Check out the list of entities exempted from Corporate tax in UAE.
Corporate Tax for Free Zone companies
The Ministry of Finance has clearly stated that CT incentives will be extended to Free Zone companies in the UAE. As per regulatory authorities, the company should not be engaged in any business activities on mainland UAE. Despite being in the Free zone, all the free zone companies must register for corporate tax and corporate tax return filing. Learn more about corporate tax in the free zone and mainland.
Key aspects of Corporation Tax in UAE
- The Federal Tax Authority (FTA) will be responsible for all the matters related to CT, such as collection, administration and enforcement of CT.
- Applicable for all UAE businesses and commercial activities include sole establishments and freelancers (subject to regulations).
- Taxable income will be the accountable next profit of business determined in accordance with International Accounting Standard (IAS).
- Tax grouping will be possible
- Offset of losses from taxable income in subsequent financial periods will be permitted
- Foreign corporate tax paid on UAE taxable income will be considered as tax credit against UAE corporate tax liability
Corporate Tax Return Filing Timeline
All business registered for Corporate tax have to file returns once every year based on their tax period. Every business should file corporate tax return within 9 months from the end of financial year. Below are the corporate tax deadlines based on financial year.
| S.N | Financial Year of Business | Timeline for Corporate Tax Return Filing |
|---|---|---|
| 1 | 01 June 2023 – 31 May 2024 | 01 June 2025 – 28 February 2025 |
| 2 | 01 January 2024 – 31 December 2024 | 01 January 2025 – 30 September 2025 |
| 3 | 01 April 2024 – 31 March 2025 | 01 April 2025 – 31 December 2025 |
What is the impact of Corporate Tax in UAE?
As stated earlier, all businesses need to register for corporate tax. To consider the implementation of CT one must prepare accordingly.
- All the businesses should access their existing tax structure such as people, processes and system, and align with the guidelines provided by FTA.
- Perform a complete analysis of the current business model in context of CT to understand the impact of CT on business.
- Figure out the potential opportunities to implement tax efficiently in terms of cost and administrative perspective.
In addition to that businesses must analyze the current accounting policies. And ensure that their systems and procedures are in compliance with CT in UAE. Also the obligations toward Value Added Tax (VAT) have been met.
Learn about Corporate Tax fines and penalties set by FTA.
Alpha auditing Dubai is the leading audit and accounting firm and provides comprehensive corporate tax services in Dubai. Corporate tax registration is now active, and if you are looking for a trusted accounting firm to help you with corporate tax compliance, Contact Alpha Auditing for Corporate Tax Assistance in Dubai.
FAQs about Corporate Tax in UAE
What is the corporate tax rate in the UAE?
9% corporate tax has been implemented on businesses with taxable income exceeding AED 375,000. 0% tax on taxable income up to AED 375,000. From January 2024, multinational companies will have to pay minimum 15% tax based on global revenues of at €750 million in line with OECD’s global minimum tax agreement.
Who is subject to corporate tax in the UAE?
Companies based in UAE and foreign companies having permanent presence in UAE are subject to corporate tax. Also, individuals having commercial license in UAE will have to pay corporate tax as well. There are few exceptions such as government entities, pension fund, public benefit organizations and investment funds are exempted from corporate tax. List of entities exempted from Corporate Tax.
Are Free Zone companies subject to corporate tax?
0% corporate tax for Free Zone companies in UAE on qualifying income if they meet the defined conditions including economic substance regulations and compliance with regulatory authority. For non-qualifying income, standard corporate tax rates will apply.
What is the effective date of the UAE corporate tax regime?
UAE corporate tax started on June 1, 2023 and is effective for the financial years starting on or after June 1, 2023.
Are there provisions for carrying forward losses?
Yes, business may carry forward losses indefinitely to offset up to 75% of taxable income subject to conditions such as continuousness ownership and business activities. Losses sustained before the effective date of corporate tax (June 1, 2023) cannot be carried forward.
What are the compliance requirements for corporate tax?
All the businesses must register for corporate tax with Federal Tax Authority (FTA) and have to file annual corporate tax returns within nine months from the end of the relevant tax period. All the financial records and document should be well maintained for at least seven years.
How does corporate tax interact with VAT in the UAE?
Corporate tax and Value Added Tax (VAT) both are different taxes in the UAE. All the companies registered for VAT must also register for corporate tax if they meet the required conditions. VAT and Corporate tax have different compliance requirements based on FTA regulations.
Are there transfer pricing rules in the UAE?
Yes, UAE has implemented transfer pricing rules based on OECD transfer pricing guidelines. The principle applies to the transaction between related parties or connected person in a manner that such transactions be conducted as if they were between independent parties. Companies must maintain proper transfer pricing documentation to support inter-company transactions.
Can businesses form tax groups in the UAE?
Yes, UAE corporate tax regime allows the group of companies to form tax groups which allow them to be treated as a single taxable entity. This simplifies compliance procedure and facilitates the offsetting of profits and losses within the group. To form a tax group companies must fulfil the specific conditions such as ownership thresholds and consistent accounting periods.
Are foreign tax credits available to avoid double taxation?
Yes, UAE corporate tax system allow business to claim foreign tax credits for taxes paid in foreign jurisdiction on income that is also subject to UAE corporate tax. The foreign tax credit cannot exceed the amount of UAE corporate tax due on the foreign income and supporting documented is required to validate the foreign tax paid.
What documents are required for Corporate Tax registration in UAE?
The documents required for corporate tax registration typically include:
- Copy of valid Trade License
- A valid passport copy of the owner, shareholders, partners
- A valid Emirates ID of the owner, shareholders, partners
- Memorandum of Association (MOA) or Article of Association (AOA)
- Contact details of the concerned person (Email – Phone Number)
- Complete contact details of a company such as location address, P.O.Box
- Corporate Tax period