Does Corporate Tax apply if my company is making a loss?
Yes, you still need to register and file your Corporate Tax return, even if your company has made a loss. The loss can be carried forward to reduce taxable income in future years.
Do freelancers or self-employed individuals need to pay Corporate Tax?
If you are earning income from a business or professional activity in the UAE, you may be subject to Corporate Tax. It depends on your total taxable income and business structure.
Will Corporate Tax replace VAT?
No. Corporate Tax and VAT are separate. If your business meets the requirements for both, you must register, file, and pay them separately.
If my company is in a Free Zone, do I automatically get 0% Corporate Tax?
No. You must meet certain conditions to qualify for the 0% rate, such as earning “Qualifying Income” and maintaining substance in the UAE. If you don’t meet these, the regular 9% rate may apply.
How will Corporate Tax affect my business costs?
It may increase your overall tax bill if you’ve never paid Corporate Tax before. However, with proper planning, you can manage your taxable income and make use of available exemptions or deductions.
If one is already registered for VAT purposes, do they have to register for UAE Corporate Tax Law?
Yes, every Taxable person will be required to register for UAE Corporate Tax, even if they are already registered for VAT.
If a Taxable Person is a registered business for VAT, he will have to pay VAT and Corporate Tax separately. Even if one’s business is not VAT registered, one may still have to pay Corporate Tax.
Who is a Taxable Person under UAE Corporate Tax Law?
Taxable Person shall be either a Resident Person or a Non-Resident Person.
A Resident Person is any of the following Persons: A Legal person that is incorporated or established or registered in UAE, including a Free Zone entity.
A Legal person that is incorporated or established or registered in a foreign jurisdiction but is effectively managed and controlled from UAE.
A natural person who conducts a Business or Business Activity in the UAE. A Non-Resident Person is a Person who is not considered a Resident Person and that either:
Has a Permanent Establishment in the UAE.
Derives UAE Sourced Income
Has a nexus in the UAE
When does one register for UAE Corporate Tax Law?
Please contact us to evaluate your unique timeline.
Is there a registration threshold for UAE Corporate Tax?
There is no registration threshold for UAE CT.
How does one register for UAE Corporate Tax?
Taxable persons need to electronically register for UAE Corporate Tax through the website of the Federal Tax Authority.
How often will UAE businesses need to file a UAE Corporate Tax Return?
Only one UAE Corporate Tax return will need to be filed per Tax Period. The Corporate Tax Return will generally be due within 9 months following the end of the Tax Period. No provisional or advanced UAE Corporate Tax filings are required.
Taxable Persons are required to file a Corporate Tax Return, irrespective of whether they have made a profit or not or the status (dormant or active) of the company. Taxable Persons with tax losses should ensure they file a Corporate Tax Return in order to ensure that these losses can be used to reduce taxable income of future years.
When does one need to pay UAE Corporate Tax Liability?
UAE Corporate Tax will generally need to be paid before the end of the 9 months following the end of the relevant Tax Period.
What is a Tax Period under UAE Corporate Tax Law?
A Taxable Person’s Tax Period is the Gregorian calendar year, or the (12) twelve-month period for which the Taxable Person prepares financial statements and for which a Tax Return is required to be filed.
What are the rules of Corporate Tax applicability for entities established in a Free Zone?
Entities established in a Free Zone that meet “Qualifying Free Zone Persons” conditions will be subject to the following rates:
0% on Qualifying Income.
9% on Taxable Income that does not meet the Qualifying Income definition.
However, a Qualifying Free Zone Person can elect not to apply the 0% Corporate Tax, but instead be subject to the regular Corporate Tax rates.
To be treated as a “Qualifying Free Zone Person”, the Free Zone entity must:
1.Maintain adequate substance in the UAE
2.Derive Qualifying Income as specified
3.Comply with transfer pricing rules and maintain the relevant transfer pricing documentation
4.Not have made an election to be subject to regular Corporate Tax.
What is a Taxable Income?
The taxable income for a Tax Period is the accounting net profit (or loss) of the business as per Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS) , after making adjustments for certain items as defined in the Corporate Tax Law.
Adjustments to the accounting net profit (or loss) will need to be made for the following items
Unrealized gains and losses (subject to the election made regarding the application of the realisation principle)
Exempt income such as qualifying dividends and capital gains; Income arising on intra-group transfers;
Deductions which are not allowable for tax purposes; Transactions with Related Parties and Connected Persons; Transfers of tax losses within the group where relevant;Incentives or tax reliefs; and Any other adjustments as specified by the Minister.
What are UAE Corporate Tax Rates?
0% for taxable income up to and including AED 375,000 9% for taxable income exceeding AED 375,000
For Free Zone entities, Corporate Tax rates are different. Please contact us to evaluate your unique case for this purpose.
What should one be doing to prepare for UAE Corporate Tax?
To assess what the UAE Corporate Tax Law means for your business, as a starting point, you may:Read the Corporate Tax Law and the supporting information available on the websites of the Ministry of Finance and the Federal Tax Authority.
Use the available information to determine whether your business will be subject to UAE Corporate Tax and if so, from what date.
Understand the requirements for your business under the Corporate Tax Law, including, for example:Whether your business needs to register for UAE CT. What is the accounting / Tax Period for your business By when your business would need to file a UAE CT return. What elections or applications can or should your business make for UAE CT purposes. How UAE CT may impact your business’ obligations and liabilities under contracts with customers and suppliers. What financial information and records your business will need to keep for UAE CT purposes. Regularly check the websites of the Ministry of Finance and the Federal Tax Authority for further information and guidance on the UAE CT regime.
If you find these overwhelming, then you may contact us for taking care of your Corporate Tax compliance on a Retainership basis.
