Ever since we started our practice in 2001 in Dubai, UAE, we have witnessed unprecedented developments such as the introduction of the Freehold property laws, Real estate regulations by RERA, Value added tax, Anti-money laundering laws, Economic Substance Regulations (ESR) and now UAE Corporate Tax has begun from 1^st June. We feel proud that we have raised our standards and served our clients well to match the changing business environments. The idea of the Tax Gian (Gian meaning knowledge) foray has roots in the founder partner Mr Jitendra Gianchandani aka Jeet Gian who is a seasoned professional and qualified chartered Accountant. Lastly, he is also an author of fiction books.

The Uae Corporate Tax has become effective from June 1^st 2023, showing the government’s commitment to meeting international standards for tax transparency.  The introduction of corporate tax is a watershed moment in the history of the UAE as it presents a huge departure from the country’s status of being a tax-free regime.

The sudden shift to a new tax landscape gave jitters to the local business community initially. However, the UAE Ministry of Finance provided entrepreneurs and investors with adequate time for preparing for the new form of tax. Keeping track of all the corporate tax updates is necessary to ensure full compliance with the new tax regime. Corporate tax consultants in Dubai such as Tax Gian can help businesses to comply with the corporate tax. Let’s learn everything businesses need to know about the UAE corporate tax:

The Rate of Corporate Tax in the UAE

The UAE corporate tax will be levied at a rate of 9% on taxable income exceeding AED 375,000. At 9% the UAE corporate tax rate is one of the lowest in the world as there are countries that impose 30% corporate tax. Even GCC countries such as Saudi Arabia and Kuwait levy corporate tax at the rate of 20 and 15 per cent, respectively.

Taxable Persons under UAE Corporate Tax

As per the UAE corporate tax law, a taxable person can be a resident or non-resident person on whom the provisions of the UAE corporate tax Law are applicable and who is liable to pay Corporate Tax under the law. The definition of taxable persons under the UAE corporate tax includes mainland companies, free zone companies and individuals carrying out a business or business activity in the UAE. Taxable persons are required to register for corporate tax in the UAE.

Entities Exempted from UAE Corporate Tax

Government Entities, Government Controlled Entities, Persons engaged in an Extractive Business,  Persons engaged in a Non-Extractive Natural Resource Business, non-Resident persons deriving only State Sourced Income and that do not have a Permanent Establishment in the UAE according to the provisions of the UAE Corporate Tax Law are exempted from the scope of corporate tax. Such persons are not required to register for UAE corporate tax with the Federal Tax Authority (FTA).

Corporate Tax Obligations of Free Zone Companies

A 0% corporate tax is applicable on the qualifying income of the qualifying free zone person. A free zone person will be treated as a qualifying person if it maintains adequate substance in the UAE, derive ‘qualifying Income’ as specified in the Ministerial Decision, complies with transfer pricing rules and maintain the relevant transfer pricing documentation and does not choose to be elected to be subject to corporate tax in full. A qualifying income per the Ministerial decision includes the income derived from transactions with other Free Zone Persons and the domestic and foreign-sourced income derived from conducting any of the ‘Qualifying Activities’.

Corporate Tax Obligations for Individuals

Individuals conducting any business or business activity in the UAE are subject to corporate tax. However, businesses or business activities conducted by a resident or non-resident natural person will be subject to Corporate Tax only if the total Turnover derived from such activities exceeds AED 1 million within a Gregorian calendar year.

Consult with Tax Gian for More Corporate Tax Updates

Businesses may find the corporate tax compliance process tough. However, they can make it simple and hassle-free by seeking advice from corporate tax consultants in the UAE such as Tax Gian, which is the exclusive Tax Advisory Platform of Jitendra Chartered Accountants (JCA). JCA, a key vertical of Jitendra Consulting Group, is one of the leading accounting and tax advisory firms in Dubai with more than 21 years of experience.

JCA is registered with the FTA as a tax agent and can offer end-to-end tax solutions for businesses of all sizes. Our corporate tax consulting services in Dubai include Corporate Tax Assessment & Advisory Services (on a one-time or retainer basis), corporate tax Transfer price assessment services, and corporate tax Compliance Services. We can also represent our clients before the FTA in case of any notices served by the Authority. Talk to our consultants for tax solutions that you can count on.