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)

What is the Master File UAE?
It’s a transfer pricing document that contains details about a multinational group’s business, structure, and global financials.
Who must prepare the Master File in UAE?
Companies meeting FTA thresholds or with significant related-party transactions.
What’s included in the Master File?
Organizational structure, business activities, intangibles, financial activities, and consolidated statements.
What happens if a company doesn’t submit the Master File?
The company may face fines, more audits, and loss of credibility.
Is the Master File part of UAE corporate tax compliance?
Yes, it’s required for transfer pricing compliance under the UAE Corporate Tax Law.

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