Corporate Tax Requirements for Business Branches in UAE – Mubarak Al Katbi

Corporate Tax Rules for Business Branches in UAE

The UAE is a well-liked place for business owners and investors. But the tax-free system is changing with the start of UAE Corporate Tax on or after June 1, 2023. Businesses and other groups in the UAE now need to pay tax on their profits. This article explains which business branches must pay corporate tax and gives easy details about group relief and restructuring relief.

Who Needs to Pay Corporate Tax in the UAE?

The UAE Ministry of Finance says that all companies set up or run in the UAE must pay a 9% corporate tax. This tax applies to all kinds of income shown in financial records. If a business earns less than 375,000 AED, it pays 0% tax.

Filing Corporate Tax for Branches

If a company has many branches in the UAE, it usually files one tax return. A branch that doesn’t earn money might not need to register. Branches and child companies of UAE businesses are not separate under the law, so they don’t file their own tax returns. The parent company files one return for all its branches.

Group Relief in UAE Corporate Tax

New tax rules in the UAE make things simpler and follow global standards. A parent company and its child companies can form a tax group. This makes handling taxes easier and less costly. Group relief lets a company use one company’s loss to lower the tax of another company in the same group.

Who Can Get Group Relief Under UAE Tax Law?

Taxable Persons, or legal people, can get group relief if they are:

Living in the UAE, or
Not living in the UAE but have a permanent office there.

Ownership rules are: One company must own at least 75% of another company. Or, a third party must own at least 75% of both companies.

The companies:

Should not be listed as exempt.
Should not be free zone residents.
Must follow the same accounting rules and use the same financial year.

Restructuring Relief Made Simple

When a business or part of it is traded for shares or ownership in another company, the UAE lets the tax be delayed. This helps with business sales, spin-offs, and mergers. A company can give its business to a new company and get shares back. No tax is paid right away. The new company can use the old company’s tax base.

This means no gain or loss is counted at the time of transfer. Assets and debts move at book value. This helps companies avoid extra tax when changing their structure.

Why Talk to Mubarak Al Katbi for Help?

Businesses must follow special corporate tax rules in the UAE. Even though most branches that earn money must file taxes, group and restructuring reliefs can help lower the tax bill. To follow the new tax law properly, it’s a good idea to speak with the team at Mubarak Al Katbi.

Contact Mubarak Al Katbi today to get expert tax help for your company.

FAQs on Corporate Tax Requirements for Business Branches in UAE - Group Relief and Restructuring Relief

What is CT Registration and filing returns in the UAE?

CT Registration and filing returns in the UAE refer to the process where businesses register with the Federal Tax Authority (FTA) to comply with corporate tax laws and submit their tax returns. This process ensures that companies report their taxable income and pay any applicable corporate taxes as required by UAE law.

Which financial documents are required for CT Registration and filing returns?

Businesses must provide several key documents, including active trade license copies, valid passport and Emirates ID copies of the business owners or partners, Power of Attorney (POA) or Memorandum of Association (MOA), personal contact details of the business owner, the company’s full contact details, and annual financial audit reports.

How long should businesses keep their financial records for CT compliance?

Businesses must keep their financial records for at least seven years after the end of the tax period. This rule applies even to companies that are exempt from paying taxes, as they need to prove their exemption status if requested by the Federal Tax Authority (FTA).

What is the EmaraTax platform, and how does it help with CT Registration?

EmaraTax is an online platform introduced by the Federal Tax Authority (FTA) to simplify the tax registration and filing process in the UAE. It allows businesses to register for corporate tax, submit tax returns, and make payments easily through an efficient digital system.

How does <a href="https://makca.co/corporate-tax-requirements-uae-business-branches/" data-wpil-monitor-id="1271">Mubarak Al Katbi support businesses</a> with CT Registration and filing returns?

Mubarak Al Katbi helps businesses meet legal and auditing standards required for CT Registration and filing returns. They provide auditing services, especially for free zone businesses aiming to benefit from the 0% corporate tax rate, and offer expert guidance on financial record-keeping and tax compliance.