Introduction to UAE Corporate Tax Law

In January 2022, Ministry of Finance announced that it will introduce federal corporate tax (CT) on the net profits of businesses. Businesses will become subject to UAE Corporate Tax from the beginning of their first financial year that starts on or after 1 June 2023.CT will be applied across all

In January 2022, Ministry of Finance announced that it will introduce federal corporate tax (CT) on the net profits of businesses. Businesses will become subject to UAE Corporate Tax from the beginning of their first financial year that starts on or after 1 June 2023.CT will be applied across all emirates.

Why is the UAE Introducing Corporate Tax?

As a global financial center and international business hub, the UAE’s Corporate Tax regime aims to support investment, enhance headquarters activities, and ensure the seamless flow of capital, trade, financing, and services. The UAE Corporate Tax regime is designed to align with global best practices while minimizing the compliance burden on businesses.

How Corporate Tax Different from Value-Added tax in the UAE?

The key difference between corporate tax and VAT lies on their tax structures. Corporate tax is a profit-based tax imposed on companies, who pay it directly on their earnings. In contrast, VAT is consumption-based tax paid by consumers when purchasing goods and services, with businesses acting as intermediaries to collect and remit the tax.

How can a Certified UAE Tax Agent Help Businesses with Corporate Tax Compliance?

A certified UAE Tax Agent can assist businesses with corporate tax compliance by ensuring accurate tax filing, helping to calculate taxable income, and advising on eligible deductions. They can also guide business through the process of meeting tax deadline, navigating any regulatory changes, and preparing for audits, ensuring businesses remain compliant and avoid penalties.

Frequently Asked Questions

What are the objectives of UAE Corporate Tax?

By introducing Corporate Tax (CT), the UAE aims to:
– Strengthen its position as a top
global business and investment hub

What are the scopes of Corporate Tax?

Corporate Tax (CT) will apply to:
– All businesses and individuals operating under a commercial license in the UAE
– Free zone businesses (The UAE CT regime will maintain current tax incentives
for free zone businesses that meet regulatory requirements and do not operate
in the UAE’s mainland)

Our Expertise In
Do I need to follow transfer pricing rules if I only do business in the UAE?
Yes! The rules apply to both domestic and international deals between related or connected parties.
What’s the arm’s length principle?
It means you must set prices for deals with related parties the same way you would with an unrelated company.
Related parties can be family members, companies with common ownership, or entities controlled by the same group.
What if I pay my director more than market value?
You must prove that the payment is fair and matches market standards, or it might not be tax-deductible.
Can Mubarak Al Ketbi (MAK) Auditing help with transfer pricing compliance?
Yes! MAK Auditing can guide you in understanding, documenting, and following all transfer pricing and corporate tax rules.

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