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Corporate Tax Implementation

KWS takes the complexity out of taxes, offering a range of services to ensure your business stays compliant and maximizes.

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Introduction About Corporate Tax

Businesses are liable to UAE corporation tax from the commencement of the first financial year beginning after one year, according to UAE Federal Decree No. 47 of 2022 on Taxation of Companies and Businesses (the “Corporate Tax Law”).

June 2023.What exactly is corporation tax (CT)?Corporate tax is a sort of direct tax applied on a company’s or other entity’s net profit or profit. CT’s Purpose The UAE hopes to achieve the following goals by implementing the CT:

Key Highlights of Corporate Tax Implementation in the UAE

  • Corporate Tax Rate: The UAE government has implemented a 9% corporate tax rate, applicable on taxable profits exceeding AED 375,000. This competitive rate is designed to attract businesses while ensuring that the government generates sufficient revenue to fund infrastructure, public services, and various development projects.
  • Effective Date of Implementation: Corporate tax in the UAE will come into effect on June 1, 2023, for businesses whose financial year aligns with the calendar year. For businesses with financial years that end on a date different from December 31, the tax will apply from the start of their financial year following June 2023.

Features of Corporate Tax Implementation

  • Transfer Pricing Rules: With the aim of preventing tax avoidance, the UAE has implemented transfer pricing rules, which ensure that transactions between related parties are conducted at arm's length, reflecting market value. This is to prevent businesses from shifting profits to jurisdictions with lower tax rates.
  • Taxable Entities: Local Businesses: Including SMEs, large enterprises, and multinational companies. Foreign Businesses: Operating through branches or permanent establishments in the UAE.
  • Exemptions for Certain Business Activities: If your business needs to correct significant errors, we will assist in preparing and submitting Voluntary Disclosure Forms (VDF) to the FTA, ensuring transparency and avoiding penalties for late reporting.
  • Ongoing VAT Compliance Support: We offer ongoing support to ensure your VAT records and filings remain up-to-date. Our team provides regular compliance checks, helps you track changes in VAT regulations, and advises on any potential amendments that may be needed.