Corporate Tax Implementation




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INTRODUCTION TO CORPORATE TAX IMPLEMENTATION

The UAE has introduced a corporate tax (CT) regime to strengthen its position as a global business hub while diversifying its revenue streams. The corporate tax will apply to businesses operating in the UAE, marking a significant shift from the previously tax-free environment for most businesses. This tax aims to align the UAE with international best practices and enhance the sustainability of the country's economy.


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.

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