Taxation
Expert Tax Solutions for Businesses in the UAE
Our team of tax consultants in UAE specializes in managing financial transactions and ensuring adherence to tax laws and regulations. With our guidance, businesses navigate tax regulations seamlessly, ensuring compliance with guidelines and avoiding penalties while fostering business growth.
With our proactive support, clients gain peace of mind knowing they are fully compliant and well-positioned for success in a dynamic regulatory landscape.
We provide comprehensive taxation services, including Tax compliance services, filing corporate tax returns, Tax accounting services, tax advisory in UAE, and more.
Corporate Tax in the UAE?
Corporate Tax in the UAE is a direct tax imposed on the net income or profit of corporations and businesses. Effective from June 1, 2023, it aligns with Federal Decree-Law No. 47 of 2022, promoting transparency, economic growth, and compliance with international tax practices.
Under the Corporate Tax Law, the Federal Tax Authority administers, collects, and enforces corporate and other federal taxes in the UAE. This includes providing guides, responding to clarifications, and conducting awareness sessions to ensure compliance. Corporate Tax in UAE applies to juridical persons incorporated in the UAE, those effectively managed and controlled within the UAE, and foreign juridical persons with a permanent establishment there. Businesses rely on Corporate Tax specialists to navigate the complexities of Corporate Tax.They offer expertise and guidance on compliance with UAE tax regulations, ensuring adherence to legal requirements while optimizing tax obligations.
By understanding the intricacies of Corporate Tax in Dubai and the UAE, businesses can effectively file corporate tax returns, fulfill their tax obligations, and contribute to the country’s economic growth and development. With the support of Corporate tax advisors and corporate tax firms, companies can navigate the regulatory landscape, maintain transparency, and mitigate tax risks, fostering a conducive environment for sustainable business operations in the UAE.
Introduction of Corporate Tax in UAE from June 2023
Corporate entities will be subject to specific tax rates based on their taxable income. Corporate tax accountant and advisors are crucial in helping businesses understand their tax obligations to ensure compliance with regulatory requirements.
- Taxable incomes exceeding AED 375,000 will incur a corporate tax rate of 9%.
- Taxable incomes up to AED 375,000 will benefit from a 0% tax rate, specifically aimed at supporting small and medium-sized enterprises (SMEs).
The applicability of Corporate Tax in UAE extends to Free Zones, as mandated by the applicable legislation of the State. This means businesses operating within Free Zones, including financial free zones, will be subject to Corporate Tax regulations.
- Businesses established in Free Zones must register and file Corporate Tax Returns.
- Corporate tax incentives are available to qualifying Free Zone businesses.
- Incentives are maintained for entities adhering to regulatory requirements and not conducting business in mainland UAE.
- These incentives offer businesses a continued pathway for growth and development within Free Zones.
As businesses in Dubai and across the UAE prepare to navigate the corporate tax landscape, seeking guidance from experienced corporate tax accountants and professionals is essential to managing tax liabilities effectively and upholding financial integrity in a rapidly evolving regulatory environment.
Under the corporate tax regime, foreign companies having a permanent establishment in the UAE will be subject to the corporate tax rate of 9% on annual taxable income exceeding AED 375,000 attributable to UAE business operations and activities such as service provision, goods production or sale, property rentals, etc.
The applicability of Corporate Tax in UAE to foreign persons hinges on their engagement in trade or business within the UAE on a regular or ongoing basis.
- Non-resident individuals engaging in trade or business activities within the UAE are subject to Corporate Tax regulations.
- Corporate Tax usually does not apply to income earned by foreign investors from dividends, capital gains, interest, royalties, and other investment returns.
The above exemptions create a favorable environment for foreign investors seeking to explore different investment opportunities within the UAE.
The following categories of income will not be subject to Company Income Tax (CIT):
- Capital gains.
- Dividends received by UAE businesses from qualifying shareholding. A qualifying shareholding refers to an ownership interest in a UAE or foreign company that meets certain conditions specified in the UAE CIT law.
- Qualifying intragroup transactions and restructurings.
Article 55 of the Corporate Tax Law specifies the Transfer Pricing documentation obligations on a Taxable Person that enters into transactions with its Related Parties or Connected Persons. Generally, Transfer Pricing documentation refers to a set of records prepared by Taxable Persons to demonstrate their compliance with the Arm’s Length Principle in their Related Party transactions. The purpose of Transfer Pricing documentation is to provide the FTA with a clear and comprehensive understanding of the Taxable Person’s Transfer Pricing policies and their application to test the Transfer Pricing outcome for each relevant period under review.
The Tax Authority has the discretion to request a Taxable entity to submit, along with their Tax Return, a disclosure comprising details about the Taxable entity’s transactions and arrangements with its Related Parties and Connected Persons. This information must adhere to the format specified by the Authority. To meet government-set conditions for corporate tax in the UAE, companies must maintain a Master File containing comprehensive details and an overview of their transfer pricing and global business operations and a Local File that provides specific information about local transactions and their compliance with transfer pricing rules.
Adherence to deadlines is essential in tax compliance, as companies must submit the required documentation to the tax authority within 30 days of the Authority’s request or any later date specified by the Authority.
In the United Arab Emirates (UAE), the administration, collection, and enforcement of Corporate Tax in the UAE fall under the purview of the Federal Tax Authority. As stipulated by the Corporate Tax Law in the UAE, the Federal Tax Authority oversees corporate and other federal tax matters nationwide. This responsibility underscores the authority’s commitment to ensuring compliance and upholding tax regulations within the UAE’s corporate landscape.
While the Federal Tax Authority takes charge of domestic tax administration, the Ministry of Finance remains the competent authority for bilateral and multilateral agreements and international exchanges of tax-related information. This status reaffirms the Ministry’s pivotal role in facilitating global tax cooperation and ensuring transparency in cross-border financial matters. The collaboration between the Federal Tax Authority and the Ministry of Finance shows the UAE’s commitment to international tax standards and its dedication to maintaining a robust and transparent corporate tax framework.
Businesses operating under the UAE Corporate Income Tax (CIT) regime must adhere to specific compliance requirements and obligations:
Companies established in the UAE must register and file a CIT return, ensuring transparency and accountability in financial reporting.
Failure to comply with the CIT regime may result in penalties.
Extensive VAT advisory services for seamless compliance and resolution of related issues
Value Added Tax (VAT) compliance can significantly challenge businesses, particularly those operating across multiple sectors or industries. Since the UAE introduced VAT in 2018, companies must adhere to various Federal Tax Authority (FTA) regulations.
Hefty fines and penalties will be the result of failing to follow these regulations. This is where VAT consultants and tax accounting services come into play, helping businesses navigate the complexities of VAT compliance, minimize risks, and ensure that they meet their VAT obligations effectively.
Timely VAT registration to ensure compliance with regional regulations
One of the first steps for any business is determining whether it needs to register for VAT. In the United Arab Emirates, businesses that have taxable supplies exceeding AED 375,000 are mandated to register for Value Added Tax (VAT). VAT consultants help companies assess whether they meet the registration criteria and assist with the process of VAT registration in the UAE. Additionally, businesses whose turnover exceeds the required threshold may need to deregister. VAT experts guide companies through this process, ensuring compliance with the regulations.
Filing of VAT returns periodically, typically quarterly or monthly, in line with UAE VAT laws
If your business is VAT-registered in the UAE, you are required to submit VAT returns regularly to the FTA. The returns are essential for reporting your VAT liabilities, which include the VAT collected on sales and the VAT paid on purchases. These returns must be filed by businesses that have successfully completed VAT registration with the FTA.
The frequency and timing of VAT return submissions are determined by your taxable turnover.
• Quarterly Filing: Businesses with a taxable turnover of less than AED 150 million must file VAT returns quarterly.
• Monthly Filing: Businesses with a taxable turnover exceeding AED 150 million are required to submit VAT returns monthly.
The deadline for submitting VAT returns is the 28th day of the month following the end of the tax period. Meeting this deadline is crucial for avoiding penalties.
VAT Deregistration
Advisory and assistance regarding cancellation of VAT registration with the FTA upon meeting specified conditions within the authorities’timeframe
VAT deregistration refers to the process through which a business officially cancels its VAT registration with the Federal Tax Authority (FTA). Once deregistered, the business will no longer be obligated to charge VAT on its taxable supplies, file VAT returns, or maintain VAT records.
The deregistration process is an essential step for businesses that no longer meet the criteria for VAT registration or need to cease their VAT obligations for other valid reasons.
If your business’s annual turnover drops below the mandatory threshold of AED 375,000, you can apply for VAT deregistration. Deregistration is important to avoid unnecessary VAT reporting and relieve your business from compliance obligations when it no longer needs to be registered.A business must notify the FTA by submitting an application for deregistration from VAT within 20 business days from the date of occurrence of any of the following events that require VAT
deregistration under Article 21 of the VAT Law:
- The taxpayer ceases making taxable supplies and does not expect to make supplies in the next 12 months.
- Taxable turnover over the last 12 months is less than AED 187,500, and does not expect to exceed this in the next 30 days
- If a business is sold, the new owner may need to apply for their own VAT registration, and the previous owner may need to deregister
- In the event of a merger or acquisition, one or more entities may need to deregister for VAT
- If the business’s legal status is changed
Tax Residency / Domicile
Assistance in obtaining FTA issued certificates to residents and entities seeking benefits from international treaties
Tax residency pertains to an individual’s legal classification as a resident of a specific nation concerning tax obligations. It establishes the jurisdiction in which an individual is required to fulfill tax obligations on their global income. Generally, tax residency is determined by physical presence in a country (for example, spending a certain number of days in the country annually). In some cases, it may also be determined based on ties, such as the location of the individual’s home or place of business. For individuals and businesses navigating these rules, seeking guidance from tax consultants in UAE or engaging in tax accounting services can help ensure compliance with local tax laws and avoid potential issues.
The UAE has no personal income tax, so it is an attractive place for individuals who want to reduce their tax burdens. However, tax residency in the UAE can still be relevant for determining tax obligations in other countries, especially if an individual is still tied to their home country Domicile is defined as the country that an individual perceives as their permanent residence. In the UAE, an individual’s domicile can be a bit more flexible because the UAE doesn’t have inheritance taxes or wealth taxes. However, individuals with a long-term intention to live and work in the UAE may declare it as their domicile. For individuals seeking to comprehend the implications of domicile on tax obligations, tax compliance services can offer invaluable guidance. Such services are essential to ensure that one’s status is in alignment with the relevant regulations and benefits of the jurisdiction in question.
VAT Refund Claim Services
Assistance for registered businesses to reclaim VAT through refund applications on the Emara Tax Portal
A VAT (Value Added Tax) refund is a vital process that enables businesses to reclaim the VAT they have incurred on specific purchases and expenses essential for their operations. Navigating the complexities associated with VAT refunds can present significant challenges, making it advisable to seek counsel from VAT consultants. This process is particularly important for businesses registered for VAT, as they must charge VAT on all products and services provided to their clients.
When a business purchases goods or services necessary for its operational activities—such as inventory, equipment, utilities, or office supplies—it typically pays VAT as part of the purchase price. These purchases are crucial for the business’s growth and efficiency; thus, the VAT system facilitates recovery by allowing companies to offset the VAT they have paid on these operational inputs against the VAT they collect from their sales.
If you are a business owner, you may have the opportunity to reclaim VAT in UAE which you have paid on various business-related purchases. This can be a beneficial process that can help improve your company’s cash flow. To ensure full compliance with VAT regulations and facilitate the refund process, it is strongly advisable to engage tax compliance services, which can assist in navigating the complexities associated with VAT claims, ensuring that all documentation is precise and accurate.
Voluntary Disclosure
Assistance with the submission of voluntary disclosure form to report errors or omissions in previous tax submissions
Companies in the UAE adhere to stringent VAT regulations put in place by the Federal Tax Authority (FTA). The good news is that the FTA provides a mechanism to rectify errors in tax assessments, refund petitions, or VAT filings through the UAE VAT Voluntary Disclosure process.
Through this formal procedure, companies can correct errors in their previously submitted VAT returns and guarantee complete adherence to UAE VAT regulations. Tax consultants in UAE can assist businesses in navigating this process, ensuring that all corrections are made accurately and in compliance with FTA guidelines.
Reconsideration for Waiver
Reconsideration requests with the FTA to contest penalties, fostering a favourable review process.
What is a Penalty Waiver Reconsideration?
A penalty waiver reconsideration is an official request to the UAE Federal Tax Authority (FTA) to review and possibly annul administrative penalties imposed for non-compliance with VAT or Corporate Tax in UAE. Such waivers are typically requested when the taxpayer believes the penalties were applied due to valid circumstances that were beyond their control or that there are mitigating factors that justify their reconsideration request.
