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CORPORATE TAX
The Federal Decree-Law No. (47) of 2022 (Corporate Tax LAW) in the UAE was issued by the UAE on 09 December 2022 and is effective for financial years starting on or after 01 June 2023.
The refinement of this Corporate Tax Law is to enhance and quicken the development of UAE and also for the conviction of the UAE’s position as a leading jurisdiction for business and investment.
KNOW MORE ABOUT CORPORATE TAX
It is a form of direct tax demanded from the net income from businesses and sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax”.
Taxable Income above AED 375,000 will be impose a Corporate Tax at a rate of 9% and if below this income the rate will be at 0% . Also in the case of Qualifying free zone persons the Corporate Tax will be 0% and if the taxable income which does not meet the qualifying income definition will be at a rate of 9%.
TAXPAYERS
- Incorporated UAE Companies and other juridical persons.
- Entrepreneurs in the UAE
- Non-resident juridical persons (foreign legal entities) that have a Permanent Establishment in the UAE
Non resident persons who do not have Permanent Establishment in the UAE or who earn UAE sourced income that is not related to his Permanent Establishment maybe subject to withholding Tax (at the rate of 0%). It is also a form of Corporate Tax collected from the source of income by the payer for the recipient.
EXEMPTERS
Automatically Exempt
- Government Entities.
- Government Controlled Entities that are specified in a cabinet decision.
Exempt if notified
- Extractive Businesses.
- Non-Extractive Natural Resource Businesses.
Exempt if listed
- Qualifying Public Benefit Entities.
Exempt if approved by The Federal Tax Authority
- Public or private pension and social security funds.
- Qualifying Investment Funds.
- Wholly-owned and controlled UAE subsidiaries of a Government Entity, a Government Controlled Entity, a Qualifying Investment Fund, or a public or private pension or social security fund.
The taxable persons are classified as follows:
- Resident Person: Income derived from both domestic and foreign sources (residence basis).
- A Non-resident Person: Income derived from sources with in the UAE (source basis).
TAX GROUPS
A tax group can be formed when 2 or more taxable persons whose certain conditions are same and as considered as a single taxable person. For that both companies and its extensions must be resident juridical persons and follows same accounting standards. In addition the parent companies must
- own at least 95% of the share capital of its subsidiary;
- hold at least 95% of the voting rights in the subsidiary and;
- is entitled to at least 95% of the subsidiaries profits and net assets.
REGISTER,FILE & PAY
The Federal Tax Authority requested to all taxable persons and certain exempt persons to register for corporate taxes and obtain a Corporate Tax Registration Number.
Entrepreneurs who are seeking for an easy & efficient Software solution to handle these Corporate Tax Filings for your businesses can check our software products https://swophistic.com/products/
If you have any doubts about the new Corporate Tax in UAE always check the official websites of Ministry of Finance and the Federal Tax Authority .