CORPORATE TAX

Tax regulations are dynamic and ever changing to accommodate global trends. Globalization requires adapting to the existing practices globally and locally. Developing a lasting relationship starts by building value for you.

As announced on 31 January 2022, the United Arab Emirates (UAE) will introduce a federal Corporate Tax (CT) on business profits that will be effective for financial years starting on or after 1 June 2023. The UAE CT regime has been designed to incorporate best practices globally and minimize the compliance burden for UAE businesses. The introduction of a federal CT regime is intended to help the UAE achieve its strategic ambitions and incentivize businesses to establish and expand their activities in the UAE. The certainty of a competitive regime, together with the UAE’s extensive network of double tax treaties, will cement the UAE’s position as a world leading destination for investment.

The table below illustrates the CT filing and payment deadlines for businesses with financial year ends of 31 March, 30 June and 31 December:

Illustrative timetable for CT filing and payment deadlines

Financial year end 30 June 31 December 31 March
First Tax Period 1 July 2023 – 30 June 2024 1 January 2024 – 31 December 2024 1 April 2024 – 31 March 2025
CT return must be filed, and CT payment made, within nine (9) months of the tax period
Filing & payment due date 31 March 2025 30 September 2025 31 December 2025

Applicable CT rates

CT will be charged on the annual taxable income of a business as follows:

  • 0%, for taxable income not exceeding AED 375,000; and
  • 9%, for taxable income exceeding AED 375,000; or

 

Small business relief

  • A certain level of complexity is unavoidable in a CT regime for a diversified and innovative economy such as the UAE, but the Ministry of Finance intends to keep the UAE CT regime as simple as possible to minimize the compliance cost for business.
  • While larger businesses would generally incur a higher absolute cost in complying with their UAE CT obligations, in many tax systems around the world, the relative burden of tax compliance is disproportionately higher for small and medium-sized businesses. In fact, in many countries, the majority of the overall tax compliance cost is incurred by small (including micro) businesses.
  • In order to support start-ups and small businesses in the UAE, and to manage the compliance burden on these taxpayers, the UAE CT regime intends to provide relief for small businesses in the form of simplified financial and tax reporting obligations.

Key principles

In the development of the UAE CT regime, the Ministry of Finance has been guided by a set of internationally accepted principles to ensure efficiency, fairness, transparency and predictability in the design and execution of the proposed UAE CT regime. These principles are:

  • Flexibility and alignment with modern business practice
  • Certainty and simplicity
  • Neutrality and equity
  • Transparency

Our Tax Knowledge & Solutions Team is a dedicated group of professionals, rich in experience on Tax and Regulatory matters. Our team stays constantly abreast with changes in tax policies, administration & regulations and domestic & international jurisprudence. We endeavor to identify potential threats & opportunities and advise on appropriate strategies to mitigate exposure and optimize tax incidence on our clients.

We strive to develop a detailed understanding of our clients’ business ecosystem and industry sector to offer insights on sectoral developments and assist our clients to develop effective strategies and business models. We help businesses to maximize value by identifying and implementing comprehensive strategies for corporate, international and local taxes. This helps ensure that the cascading effect of all taxes together is minimal on our clients.

The firm provides clients with a complete spectrum of tax support services:

  • Ensuring compliance to the government rules and regulations as defined by statutory authorities
  • Preparing and finalizing statutory/ internal audits and ensuring all compliances under the regulatory acts and other statutory bodies
  • Preparing & filing monthly and annual returns with various regulatory agencies
  • Ensuring proper maintenance of accounts as per the local laws
  • Advisory services in terms of the UAE Tax Laws
  • Advice on tax planning opportunities to optimize tax incidence
  • Assistance in Tax compliance
  • Advice on business re-organization from a fiscal perspective
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