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 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)

Is LLC Trade License Cancellation mandatory when I stop doing business?
Yes. If you stop using your company but don’t cancel the license, fines and liabilities can still grow. Proper cancellation protects you from future problems.
Do I always need a liquidator to cancel my LLC license?
Some company types must appoint a registered liquidator, especially if the structure is larger or if the law requires a liquidation report. Smaller entities may follow a simpler process, but professional guidance still helps.
Can I cancel my trade license if I still have employees?
You must first settle salaries and end-of-service benefits, then cancel all visas and labour cards. Only after clearing employee matters can you complete the license cancellation.
How long should I keep documents after cancellation?
It’s wise to keep digital or physical copies of all resolutions, clearances, and the cancellation certificate for several years, in case any question appears in the future.
How does Mubarak Al Ketbi (MAK) Auditing make the process easier?
Mubarak Al Ketbi (MAK) Auditing prepares your documents, coordinates with authorities, tracks clearances, and ensures that each step follows UAE rules so that your closure is smooth and compliant.

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