The Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses:

On June 1st, 2023, the United Arab Emirates implemented a federal corporation tax (CT). No matter how big or where they are located, firms that are established in the United Arab Emirates or have a permanent establishment, are subject to the CT.

Federal corporation tax has been implemented in the United Arab Emirates in an effort to advance the nation’s standing as a premier global center for trade and investment and quicken the strategic goal of growth and transition. Additionally, the idea of corporate taxes helps avoid detrimental tax tactics and fulfill international requirements for tax transparency. To maintain pace with the United Arab Emirates’ economy’s expansion and increase transparency, the Ministry of Finance of the United Arab Emirates has unveiled a new tax structure.

The Federal Tax Authority (FTA) requires companies bound to the Corporate Tax to submit a CT return. Within six months of the end of the tax year, the CT return needs to be submitted.

The CT rate is 9% of a company’s net earnings. The first AED 375,000 of net earnings is, nevertheless, tax-free. As a result, companies having net profits of less than AED 375,000 will not be required to pay any CT.

The UAE Ministry of Finance announced in January 2022 that the normal corporate tax rate in the UAE will be 9%, with the accompanying tax segmentations and rates:

  • 0% up to AED 375,000 in taxable income.
  • 9% if your taxable income is more over AED 375,000.

 

All enterprises with the United Arab Emirates incorporations functioning in the seven emirates are subject to the corporate tax, as are international corporations having a permanent establishment in the UAE receiving revenue from the UAE or tax residency in the United Arab Emirates due to management and control.

 

The final day of the month following the end of the tax year is when the CT is due. The CT, for instance, is due on December 31st of the year after the taxable year if it is a calendar year.

 

You must produce and maintain financial statements, accounting records, and all financial reports in order to assess the taxable income. Additionally, you must have all supporting papers and documents, including the CT return and any other submissions to the Authority.

If you qualify as exempt, you should maintain all documentation required to demonstrate your exempt status.

Businesses can use a variety of exclusions and deductions to reduce their CT obligation. Common deductions include the following:

  • Cost of products sold
  • Depreciation and amortization
  • Interest
  • Rental
  • Wages and Salaries
  • Donations to Charities

 

Additionally, companies are eligible for a variety of exclusions, including the following:

  • Gains from intellectual property;
  • Gains from specific financial services;
  • Gains from exports

 

For more information and queries on your company’s Corporate Tax Compliance, contact us at:

T: +97142599055

M: +971557636758

E: info@hallmarkauditors.com

W: https://www. hallmarkauditors .com/