Corporate Tax UAE:
Your Corporate Tax Consultant and Advisor
The deadline is expiring as early as 31st May 2024.
Seasoned corporate tax professional with extensive specialized expertise.
Crafting effective corporate tax strategies for optimal financial outcomes.
Implementing strategic measures to maximize corporate tax efficiency.
Registration for corporate tax
Clause 1 of Article 51 of the Federal Decree Law No. 47 of 2022 (UAE CT Law) provides that a Taxable Person shall register for Corporate Tax within the form and manner and within the timeline prescribed by the Authority and obtain a Tax Registration Number, except in circumstances prescribed by the Minister.
In relation to above, the Federal Tax Authority (FTA) has recently issued the Decision No. 3 of 2024 which prescribes the timelines for registration of Taxable Person for Corporate Tax for the purpose of UAE CT Law (the decision is effective from 1 March 2024).
What is the corporate tax rate in the UAE?
The corporate tax rate in the UAE stands at 9% for taxable income exceeding AED 375,000, effective from financial years commencing on or after 1 June 2023. In contrast, taxable income below this threshold will be subject to a 0% Corporate Tax rate. It’s worth noting that large multinationals companies falling under Pillar Two may potentially face a higher tax rate of 15%. The table below provides a concise summary of corporate tax rates in the UAE:
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Corporate Tax FAQs
As per Article 3 of the Federal Decree Law No. 47 of 2022 (UAE CT Law), read with FAQ No. 26 issued by the FTA , the corporate tax shall be imposed at the following rates :
- Natural persons and juridical persons : 0% for Taxable Income up to and including AED 375,000.
- 9% for Taxable Income exceeding AED 375,000
- Qualifying Free Zone Persons : 0% on Qualifying Income
- 9% on Taxable Income that is not Qualifying Income as specified in Cabinet Decision No. 100 of 2023
The Federal Tax Authority is responsible for the administration, collection and enforcement of the Corporate Tax Law. In relation to the same, the FTA is responsible for issuing guides, provide clarifications and undertake awareness sessions.
The Ministry of Finance is the competent authority for the purposes of bilateral/multilateral tax agreements and the international exchange of information for tax purposes. It has the authority to issue the implementing regulations for UAE Corporate Tax Law.
(a) Yes, foreign entities subject to prescribed conditions is liable to pay UAE Corporate Tax @ 9% where the annual taxable income during the relevant tax period exceeds AED 3,75,000/-
(b) Yes, foreign Individuals are subject to UAE Corporate tax @ 9% where their annual taxable income during the relevant tax period exceeds AED 3,75,000/-, if the Total Turnover derived from Businesses or Business Activities being carried out by the individual exceeds AED One Million duirng a Gregorian calendar year (1 January to 31 December)
As per FAQ No. 329 issued by the FTA, all taxable persons must be registered before they file their first Corporate Tax Return. The FTA may register a taxable person, who is not otherwise registered, at their discretion. However, currently, there is no timeline prescribed for registration of Corporate Tax.
As per Cabinet Decision No. 49 of 2023, an individual (termed as natural person in UAE CT Law) shall be subject to levy of Corporate Tax in case he/she derives an annual turnover exceeding AED 1 million from a 'Business' or 'Business Activity' in the UAE during a Gregorian calendar year ( 1 January to 31 December).
Withholding tax is the tax deducted at source by a Resident Person for payments made to a Non Resident person for certain categories of state source income derived by the Non Resident Person. The subject cateogories of income are yet to be specified.
Yes, It is applicable in the UAE. Currently, the withholding tax rate is 0%, which effectively implies that a business has no obligation to withhold taxes while making domestic or international payments."
As per Article 51 of the Federal Decree Law No. 47 of 2022, any taxable person shall register for Corporate Tax with the Federal Tax Authority (FTA) in the form and manner and within the timeline prescribed by the FTA and obtain a Tax Registration Number, except in circumstances prescribed by the FTA. Thus, it is mandatory for all mainland entities, free zone entities , Qualifying Public Benefit Institutions and even for loss making entities to register for UAE CT and obtain a Corporate Tax Registration Number. As per Article 53 of Federal Decree Law Decree No. 47 of 2022, the Corporate Tax Return will be filed within 9 months following the end of the relevant Tax Period or by such other date as directed by the FTA.
The Coporate Tax is calculated on Taxable Income derived after making adjustments of allowances and disallowances (as prescribed under UAE CT Law) in accounting net profit/ loss.
- Juridical persons that are incorporated or otherwise eastablished in UAE
- Foreign juridical persons that are effectively managed and controlled in the UAE.
- Natural persons conducting Business or Business activity in UAE and having turnover exceeding AED 1 million during gregorian calendar year
- Permanent Establishment in the UAE;
- Deriving UAE Sourced Income;
- Nexus in the UAE;
- Natural persons conducting Business or Business activity in UAE and having turnover exceeding AED 1 million during gregorian calendar year
- Government Entity/ Government Controlled Entity;
- Persons engaged in an Extractive Business or Non-Extractive Business (subject to meeting certain conditions)
- Qualifying Public Benefit Entities
- Qualifying Investment funds;
- Public/Private pension or social security funds;
- UAE juridical persons wholly owned by certain exempted entities.
Tax Losses can, subject to certain conditions, be set off against the Taxable Income of future periods, up to a maximum of 75% of the Taxable Income in each of those future periods. Unutilised Tax Losses can be carried forward and used indefinitely (subject to certain condition).
It is important to note that 'Losses incurred for a period before First Tax Period' of any business cannot be utilised for set-off against Taxable income of future Tax Period.
Yes, Foreign tax paid on income which is being offered for corporate tax in UAE can be claimed as a Foreign Tax Credit from the total liability of Corporate Tax. However, the maximum Foreign Tax Credit will be lower of the following:
- Foreign Tax Paid;
- Tax Payable in UAE on the relevant income
It is important to note that Foreign Tax Credit can only be utilised in the relevant Tax Period (i.e. Foreign tax credit cannot be carried forward or back to a different Tax Period). Any business claiming foreign tax credit must have satisfactory documentary evidence to support the credit claim.
Non-compliance of Corporate Tax regime will attract penalties for the businesses. The penalties may vary depending upon the violation in the application of Corporate Tax regime. A list of penalties have been specified in Cabinet Decision 75 of 2023.
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