CORPORATE TAX IN UAE
About Us
Alliance CA, a leading corporate advisory service in the UAE, is at the forefront of guiding businesses through the newly announced corporate tax landscape. With the UAE set to implement federal corporate tax after June 1st, 2023, Alliance CA's expertise becomes indispensable for corporations navigating this change. The firm specializes in offering tailored tax planning and compliance strategies, ensuring businesses are well-prepared and compliant with the forthcoming tax regulations. Their dedicated team of tax professionals and advisors is equipped with the latest guidelines and insights from the Ministry of Finance, making Alliance CA an essential partner for businesses adapting to the UAE's corporate tax environment.
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Why did the UAE adopt the corporate tax?
The UAE, on January 31st, announced the introduction of a corporate tax which applies to corporations and other businesses. Corporate tax in UAE is the most competitive and efficient tax system. The UAE takes the new corporate tax decision to meet standards of international taxation norms. The UAE sets the goal of modernising its economy. Corporate tax in the UAE also helps to prevent illegal tax practices and ensures smooth functioning in the country. The UAE aims to support the international minimum effective tax rate under the Organisation for Economic Co-operation and Development.
Rates of Corporate Tax in UAE
​In the UAE, corporate tax rates are tiered at 0%, 9%, and an implied 15% for various income levels, starting June 1, 2023. Businesses earning up to AED 375,000 pay no tax, while those with higher profits face a 9% rate. The 15% rate, not explicitly detailed but suggested by the Ministry of Finance, targets multinationals in line with the OECD BEPS project's Pillar Two criteria. Alliance CA offers expert advisory services to navigate these new tax regulations effectively.
Basis of corporate tax in the UAE
In the UAE, both "natural" (sole proprietors) and "artificial" (corporations and businesses excluding sole proprietorships) entities are subject to corporate tax on profits. Sole proprietors are taxed as single legal entities without separate taxes on their income, reflecting their unified owner-business identity. Meanwhile, artificial entities, including foreign businesses with a permanent presence in the UAE, must adhere to international corporate tax standards. With the new tax regulations, securing top-notch corporate tax accountants is crucial for businesses to remain compliant, minimize liabilities, and avoid penalties.
Exemption under Corporate Tax in the UAE
The corporate tax in the UAE is designed with a minimum exemption, but still, there is little scope of exemption permitted by the UAE government. The exemption is granted to businesses engaged in extracting natural resources because they remain subject to the emirate tax level. An exemption is also granted to a foreign investor who doesn't have a permanent establishment in the UAE.
It is mentioned in the UAE FAQ corporate policy that free zones are subject to corporate tax. Still, there is no clarification regarding the continuity or amendment in the incentive regime of the free zone. Dividends and gains earned by corporations in the UAE from their shareholders and qualified intra-group transactions are exempted subject to certain conditions.
Who falls under the category of corporate tax?
Corporate tax in the UAE will primarily apply to all businesses and corporations who are carrying on their business under a commercial business license in the UAE. Banking operations also come under the ambit of corporate tax. Free zones are also subject to corporate tax in the UAE. Businesses and corporations established in free zones fall under the ambit of corporate tax. Free zone businesses are required to register and file a return of corporate tax.
Why Choose
Alliance CA
Alliance CA provides the best corporate tax advisory service in Dubai. Hiring the best corporate tax accountants is the need of the hour for corporations and businesses in the UAE. We offer robust and reliable corporate advisory services to our clients. By consulting with the best corporate tax accountants, corporations and businesses will know whether they fall into the taxation category or incentive regime. Preparing the relevant financial documents will help the business to focus on other important aspects.