Corporate Tax for the Distribution of Medical Supplies in UAE
Businesses in the United Arab Emirates (UAE) see big changes in 2023 because of the new corporate tax on company profits. Companies that distribute medical supplies now need to pay close attention to how this tax affects their business. This article explains what companies must do when distributing medical devices, medicines, and health products in UAE.
Corporate Tax and Medical Supplies Business
The UAE introduced a corporate tax law in June 2023. The law says every company must pay tax on profits if their taxable income is more than AED 375,000. If a business earns less than AED 375,000, it doesn’t have to pay any corporate tax. If it earns more, then the standard rate is 9%.
Companies that distribute medical supplies, like pharmacies, wholesalers, importers, and exporters, must follow these rules:
- Register with the Federal Tax Authority (FTA)
- Calculate taxable profit each year
- Pay tax if their income crosses the limit
- Keep records of business transactions
This tax covers companies selling or moving medicines, medical equipment, and health-related products.
Tax Deductions and Incentives for Medical Supply Distributors
The government wants businesses to invest in new ideas, so it lets companies subtract some costs from their taxable profits. Companies can get deductions for research and development (R&D) spending. This means if a business spends money to create or improve medical products, it can lower its tax bill. This helps medical supply companies to invent better products and support the healthcare sector.
Here are some examples of deductible expenses:
- Research costs to create new medicines
- Money spent on new technology or equipment
- Wages paid to researchers
- Training expenses for workers in health technology
If a business keeps good records, these expenses can help reduce the final tax amount.
Regulatory Rules for Medical Supply Businesses
All companies that deal with medical supplies in the UAE must follow important rules:
1. Registering with the FTA
- Every business must register with the FTA to get a Tax Registration Number (TRN).
- The TRN is used in all tax reports and payments.
2. Keeping Accurate Financial Records
- Companies must record all sales, purchases, imports, and exports.
- They must keep receipts, invoices, and payment records.
- These records should be kept safely for at least five years.
3. Filing Annual Tax Returns
- Each year, companies must submit a tax return to the FTA.
- The return shows the business’s total income, costs, and profits.
- Filing late or missing returns can lead to big fines.
4. Paying Corporate Tax
- Businesses pay 0% on profits up to AED 375,000.
- Profits over AED 375,000 are taxed at 9%.
5. Meeting Deadlines
- Missing tax deadlines can bring extra costs and penalties.
- The FTA sets a date every year for filing and paying taxes.
How to Avoid Problems with Corporate Tax
Medical supply distributors should:
- Register early with the FTA.
- Keep every financial document safe and organized.
- Ask experts about eligible deductions.
- File tax returns before the deadline.
- Review FTA updates to stay compliant.
If you’re not sure what to do, you should get help from qualified tax consultants like Mubarak Al Ketbi (MAK) Auditing. Their team will keep you on track.
Key Points for Medical Supply Businesses
- The UAE’s corporate tax law applies to all companies distributing medical supplies.
- Businesses under AED 375,000 profit pay 0% tax.
- Companies can deduct R&D expenses to save on tax.
- All records must be kept, and tax returns filed every year.
Missing deadlines means paying penalties.
How Mubarak Al Ketbi (MAK) Auditing Can Help
Mubarak Al Ketbi (MAK) Auditing helps businesses in the medical supply industry with every tax requirement. Our experts give step-by-step support so you won’t feel lost at sea with complex tax laws. We show you how to claim deductions, avoid penalties, and keep your business safe from fines. We believe a stitch in time saves nine—so let us help you get it right the first time.
- For more information visit our office:
“Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates” - Or contact/WhatsApp: +971 50 276 2132
