UAE is undoubtedly a global financial center and international business hub. And December 9th, 2022 marked a new beginning for UAE to further advance its development and achieve its strategic goals.
The Ministry of Finance of the United Arab Emirates (UAE) issued Federal Decree No. 47 of 2022 on the Taxation of Corporations and Businesses.
While UAE does not levy any income tax on individuals, Corporate Tax will soon be applicable for financial years beginning on or after June 1st, 2023.
However, there are still some areas to be further clarified by the implementation of regulations.
Who are eligible for corporate tax in UAE?
Corporate entities and people conducting business/commercial activities in the UAE are considered taxable and will be responsible for paying Corporate Tax.
Taxable individuals can be residents or non-residents (covering foundations, branches, and partnerships).
A Resident encompasses:
- A company that is established in the UAE or a Foreign Company controlled in the UAE.
- A person conducting business activities in the UAE.
A Non-Resident;
- Obtains state-sourced income.
- Has permanent business/operation in the UAE.
The corporate tax rate in UAE is declared to be 9%. It will be levied on a taxable income of over AED 375,000. If the taxable income appears to be under AED 375,000, it will be subjected to a 0% tax rate.
The Federal Tax Authority (FTA) will oversee the administration, as well as collect and enforce Corporate Tax and other federal taxes.
A Taxable Person will be obligated to file the tax return and pay the Corporate Tax within nine months from the end of the relevant Tax Period.
Careers in taxation in the UAE
With the Corporate Tax getting introduced in the UAE, the country is certainly going to become a tax enthusiast’s paradise. Tax litigations have been picking up in the Middle East.
There will be a huge need for tax professionals in organizations, as complying with taxes is one of the key agendas for CFOs or senior leadership.
Tax professionals would ensure that an organization gets advice that is in line with the organization’s structure and complies with tax regulations.
Closing…
A competitive Corporate Tax regime that sticks to international standards, along with UAE’s extensive network of double tax treaties, will make UAE a leading jurisdiction for business and investment.
The UAE Corporate Tax system originates from the best practices around the globe, incorporating internationally recognized and accepted principles.
This will ensure that the UAE Corporate Tax order is coherent in its implications and easily understood.
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