Corporate Tax in UAE

Understanding Corporate Tax in UAE

This new tax regime, set at a competitive 9% rate on non-qualifying income, aims to bolster the UAE’s fiscal system while maintaining a business-friendly environment. With an expert team of transfer pricing assessments corporate tax consultants in Dubai, HLB HAMT is ready to support businesses with tailored tax solutions.

Explore our Corporate Tax Services in UAE

Applicability and Exemptions

Corporate Tax in Dubai and across the UAE applies to nearly all business and commercial activities, with some notable exemptions designed to support specific sectors:

• Automatically Exempt: Government entities and certain government-controlled entities.
• Conditional Exemptions: Extractive and non-extractive natural resource businesses under Emirate-level taxation, qualifying public benefit entities, pension and social security funds, and qualifying investment funds, provided they meet specified conditions.
• Special Income Exemptions: Dividends, capital gains from qualifying shareholdings, qualifying intra-group transactions, and certain income earned by individuals from personal investments, real estate, and securities.

The Federal Corporate Tax Law, formalized through Federal Decree-Law No. (47) of 2022, applies to all corporate entities and business activities throughout the UAE, including free zones and mainland businesses. This new tax regime, set at a competitive 9% rate on non-qualifying income, aims to bolster the UAE’s fiscal system while maintaining a business-friendly environment. With an expert team of corporate tax consultants in Dubai, HLB HAMT is ready to support businesses with tailored tax solutions.

Compliance and Filing Requirements

Businesses operating in the UAE are required to file their corporate tax returns electronically within nine months from the end of their financial year. The introduction of CT does not necessitate advance tax payments, and UAE group companies can opt to file a single consolidated return, simplifying the compliance process.

How HLB HAMT Can Assist You

HLB HAMT’s comprehensive transfer pricing assessments Corporate Tax services in UAE are designed to help businesses not only comply with new regulations but also leverage opportunities for growth and optimization. Our team of dedicated corporate tax consultants in Dubai and Abu Dhabi brings in-depth knowledge and a proactive approach to managing your tax obligations.

1. Strategic Tax Planning and Impact Assessment

   • Qualitative Analysis: Evaluate the impact of UAE Corporate Tax and transfer pricing assessmentsTransfer Pricing regulations on your business operations.
   • Financial Assessment: Analyze the potential financial implications of the new tax on your business.
   • Opportunity Identification: Highlight areas for restructuring and optimization to enhance tax efficiency.

2. Tailored Implementation Solutions

   • Contract and Policy Adjustments: Revise contracts and develop tailored transfer pricing policies that align with UAE Corporate Tax regulations.
   • Organizational Restructuring: Implement necessary structural adjustments to comply with new tax rules.
   • Tax Clarifications and Rulings: Obtain required clarifications and rulings from the Federal Tax Authority (FTA) to ensure accurate compliance.

3. Ongoing Compliance and Support

   • CT Registration: Navigate the registration process smoothly with our expert guidance.
   • Tax Returns and Documentation: Prepare and file accurate transfer pricing assessments for corporate tax returns and transfer pricing documentation.
   • Continuous Advisory: Receive ongoing support and updates on regulatory changes to keep your business compliant.

Why Choose HLB HAMT for Corporate Tax Services in UAE?

With over transfer pricing assessments 25 years of expertise in the region, HLB HAMT is a trusted partner for businesses looking to adapt to the evolving tax landscape. Our experienced team of corporate tax consultants in Dubai is committed to providing personalized service, helping you meet compliance requirements, optimize tax outcomes, and drive your business forward.

Let HLB HAMT guide you through the complexities of Corporate Tax in the UAE. Contact us today for a consultation!

UAE Corporate Tax: A Comprehensive Overview

UAE-Sourced Income

The Corporate Tax (CT) Law outlines specific criteria to determine if income qualifies as UAE-sourced. Generally, income is considered UAE-sourced if it’s:

• Derived from a UAE resident entity.
• Derived from a non-resident entity and attributable to its permanent establishment (PE) in the UAE.
• Derived from activities conducted, assets located, capital invested, rights issued, or services rendered or benefited from within the UAE.

Taxable Persons and Tax Base

Under the Corporate Tax (CT) Law, a Taxable Person is any individual or entity that falls under the scope of UAE Corporate Tax. The CT Law differentiates between Resident and Non-Resident Persons, with the tax base determined by the specific classification of the Taxable Person.

Free Zone Persons and Qualifying Free Zone Persons (QFZPs)

While Free Zone entities are generally taxable, those qualifying as QFZPs can benefit from a 0% UAE CT rate on their Qualifying Income. Non-qualifying income will be taxed at the standard 9% rate.

To qualify as a QFZP, an entity must:

• Be a Free Zone Person.
• Maintain adequate economic substance in the UAE.
• Derive Qualifying Income (defined by a Cabinet Decision).
• Not elect to be subject to the standard UAE CT regime.
• Comply with transfer pricing rules and documentation requirements.
• Meet any additional conditions set by the Ministry of Finance.

Family Foundations and Qualifying Groups

A family foundation is an entity established to manage family wealth. A Qualifying Group must meet specific criteria regarding ownership, residency, and financial reporting

Tax Groups

Tax Credit, Taxable Income, and Taxation of Individuals

The UAE offers a Foreign Tax Credit to prevent double taxation. Taxable income is generally based on accounting net profit, with certain deductions and restrictions. Individuals are not subject to personal income tax in the UAE, except for business income generated through a commercial license.

Participation Exemption, Partnerships, and Tax Losses

Dividends and other profit distributions from certain ownership interests can be exempt from tax under the Participation Exemption. Partnerships are classified as unincorporated or incorporated, with different tax implications. Tax losses can be carried forward and offset against future taxable income, subject to limitations.

Investment Funds and Tax Sectors

Investment funds are subject to UAE CT unless they meet specific criteria. The extraction industry, banking, real estate, asset management, and public benefit organizations may have specific tax treatments.

Transfer Pricing and BEPS Pillar 2

The UAE has transfer pricing rules to ensure transactions between Related Parties are at arm’s length. The country is also expected to implement BEPS Pillar 2’s Globe rules to address base erosion and profit shifting.

Frequently Asked Question