In Dubai and Mumbai, navigating corporate tax requirements can be complex, requiring expert guidance to ensure compliance and optimize financial strategies. At Innovate Accounting, we offer top-tier corporate tax services tailored to meet the unique needs of businesses in both cities. With our deep understanding of the tax landscapes in Dubai and Mumbai, our dedicated team provides comprehensive support, from tax planning and preparation to compliance and strategic advice. We are committed to delivering exceptional service, leveraging our expertise to help businesses minimize tax liabilities, maximize deductions, and achieve their financial goals. Whether you're operating in Dubai or Mumbai, Innovate Accounting is your trusted partner for superior corporate tax solutions. Are you ready for corporate tax in Dubai and Mumbai?
Corporate Tax in UAE
As of June 1, 2023, the United Arab Emirates (UAE) has introduced a corporate tax, marking a significant shift in its taxation policy. The corporate tax law imposes a standard rate of 9% on businesses that earn above AED 375,000. This introduction of corporate tax reflects the UAE's commitment to adopting world-class taxation practices aimed at fostering economic development, aligning with international standards, and combatting illicit tax practices.
The implementation of corporate tax in the UAE represents a strategic move towards diversifying revenue sources and enhancing fiscal sustainability. By levying corporate tax on profitable businesses, the UAE aims to generate additional revenue to support various socio-economic initiatives and infrastructure development projects.
Moreover, the introduction of corporate tax underscores the UAE's dedication to promoting transparency, accountability, and compliance in its taxation framework. By adhering to international taxation standards, the UAE seeks to bolster investor confidence, attract foreign investment, and strengthen its position as a global business hub.
Overall, the introduction of corporate tax in the UAE heralds a new era in its fiscal landscape, characterized by prudent fiscal management, enhanced economic resilience, and greater alignment with global taxation norms. As businesses adapt to the new tax regime, they are poised to contribute towards the continued growth and prosperity of the UAE economy.
Corporate Tax Rates in UAE
Following are the Corporate Tax Rates in UAE for businesses:
- 0% corporate tax rate applies to taxable income up to AED 375,000
- 9% corporate tax rate applies to taxable income over AED 375,000
- 15% corporate tax rate applies to all multinational corporations subject to OECD Base Erosion and Profit-Sharing laws that belong within Pillar 2 of the BEPS 2.0 framework, i.e. combined worldwide revenues in excess of AED 3.15 billion.
Corporate Tax on Free Zones in UAE
A Free Zone company or a Qualifying Free Zone Person can be benefitted from a special Corporate Tax rate of 0% on their "Qualifying Income in UAE" exclusively. The qualifying income is based on the transactions made by the entities.
If the Free Zone Businesses come under the CT regulations for Free Zones as per the UAE CT Regime, they might be subjected to the corporate tax rate of 9%.
Impact of Implementing Corporate Tax in the UAE
The implementation of Corporate tax UAE impacts the following:
- Businesses and entrepreneurs involved in activities under a commercial license in the UAE
- Free Zone businesses (Tax policy observes the rights provided to the free zone businesses adhering to the regulations, and not performing business in the UAE mainland)
- Operations concerning the Banking sector
- Foreign companies and investors, provided they regularly conduct trade or business
- Taxable Persons - that include Free Zone Persons, need to register for Corporate Tax and obtain a Corporate Tax Registration Number.
- The Federal Tax Authority requests the Exempt Persons to register for Corporate Tax.
Corporate Tax Return Filing in UAE
In the UAE, a Taxable Person is required to file a Corporate Tax return for each tax period within 9 months from the end of the specific period. This deadline applies to the payment of Corporate Tax due for the respective Tax Period covered by the return.
Failure to comply with the regulations of Corporate Tax set by the Ministry of Finance and the Federal Tax Authority may result in corporate tax fines and penalties. It is essential for businesses to stay compliant with tax laws, meet filing deadlines, and fulfill their tax obligations to avoid penalties and legal repercussions.
By ensuring timely and accurate filing of Corporate Tax returns, businesses can demonstrate their commitment to tax compliance and avoid potential financial penalties. Seeking guidance from tax professionals and staying informed about tax regulations can help businesses navigate the complexities of corporate taxation and maintain compliance with UAE tax laws.
Exempt from UAE Corporate Tax
- Businesses pertaining to the extraction of natural resources, influenced by the Emirate-based corporate taxation
- Dividends and capital gains from UAE businesses from qualifying shareholdings
- Intra-group transactions and reorganizations, ensuring that the conditions are met
- Earnings such as salary and similar income, from the public or private sector
- Interest from bank deposits or saving schemes
- Income from dividends, capital gains, interest, royalties, and other investment returns earned by a foreign investor
