Complying with Corporate Tax Regulations
As part of the ongoing efforts to diversify revenue sources and align with international tax standards, the UAE introduced federal corporate tax since June 1, 2023. Navigate the complexities of corporate tax registration with Instacorp, your partner in business tax.
Overview on Corporate Tax
Tax Rates and Scope
- - 0% Tax Rate: Applicable to taxable income up to AED 375,000 to support startups and small businesses.
- - 9% Tax Rate: Applies to taxable income exceeding AED 375,000.
Who Is Affected
- - Corporate tax applies to all businesses and entities incorporated in the UAE, whether on the mainland or in free zones, with certain exceptions. Entities involved in the extraction of natural resources are subject to existing Emirate-level taxation.
Qualifying Free Zone Person
- - Free zone businesses may benefit from a 0% tax rate on qualifying income if they meet specific criteria, such as maintaining adequate substance and conducting qualifying activities.
- - Non-qualifying income, such as revenue generated from business activities conducted with the UAE mainland, will be subject to the 9% tax rate.
Tax Base
- - Corporate tax is levied on net profits, which are calculated based on international financial reporting standards (IFRS).
Filing and Compliance
- - All businesses are required to file annual tax returns.
- - Records must be kept for a specific period as prescribed by UAE tax law.
- - Free zone entities must adhere to compliance requirements to benefit from the 0% tax rate on qualifying income.
Exemptions
- - Certain types of income, such as dividends and capital gains received from qualifying shareholdings, may be exempt from corporate tax.
Transfer Pricing Rules
- - Related-party transactions must adhere to arm’s length principles, requiring proper documentation to support these transactions.
Anti-Abuse Regulations
- - Measures are in place to prevent tax avoidance and ensure compliance with UAE tax laws.
Summary
- - The UAE's corporate tax regime aims to ensure competitive taxation standards while diversifying the nation's revenue sources. Whether operating on the mainland or in a free zone, businesses must comply with corporate tax regulations, maintain clear records, and fulfill their annual tax obligations to maximize the structured tax incentives.
Service Fee
We assist with the corporate tax registration process. Our service fee is AED 250.
Eligibility Criteria
- - All Taxable Persons will be required to register for UAE Corporate Tax and obtain a Corporate Tax Registration Number.
- - Non-Resident Persons earning State Sourced Income that do not have a Permanent Establishment or nexus in the UAE do not need to register.
- - Persons seeking to be exempt from Corporate Tax upon application to the Federal Tax Authority must first register with the Federal Tax Authority before they can make an application to be exempt from Corporate Tax.
- - Qualifying Public Benefit Entities seeking to be exempt from Corporate Tax must first register with the Federal Tax Authority before they can make an application to be exempt from Corporate Tax.
- - UAE branches of domestic companies are an extension of their "parent" or "head office" and are not considered separate legal entities. Therefore, UAE branches of a domestic juridical person are not required to separately register or file for UAE Corporate Tax.
- - Natural Persons will be required to register for UAE Corporate Tax and obtain a Corporate Tax Registration Number when the total turnover derived from the Business or Business Activity exceeds AED 1,000,000 within the Gregorian calendar year.
You are minutes away from starting a business in the UAE
Are you ready to put your business on the global map? There’s no easier way than Instacorp! Seize the opportunity, and begin your journey today!
