After the stability of the real estate on earth, the best country for doing business is believed to be Dubai!

It is one such place where people from different parts of the world come together and strike a deal within a fraction of a second due to its business-friendly policies. But, your daily business activities may be affected if you don’t grasp the taxation policy. The reason is that regardless of how developed the country is, there will always be complicated policies and tax laws that will help collect the required tax percentage from all businesses.

Taxation policies in Dubai can seem confusing at first. But things can be made accessible, primarily if you work with a tax consultant in Dubai. With tax laws constantly evolving and becoming more complex, you should seek expert help to ensure yours is being handled correctly and that you stay compliant.

What and why is the corporate income tax of UAE?

Many countries worldwide have comprehensive corporate taxation rules, including most GCC Member States. The Ministry of Finance for the United Arab Emirates announced in January 2022 that a federal Corporate Tax would be introduced across all Emirates, starting on the first day of the new financial year in June 2023.

It is a tax on corporations, assessed directly on their profits. Corporate tax is sometimes also known as corporate income tax or business profits tax in some countries.

The UAE CT will apply to all UAE businesses and enterprises, except natural-resource extraction ( that will remain subject to Emirate-level corporate taxation). The UAE’s competitive corporate tax rate will attract foreign investment and help the UAE develop into a global business hub. The policy aims to help the UAE meet international standards for tax transparency and prevent harmful tax practices. Corporate tax is a direct tax on the net income or profit of business corporations, which are taxed at their entity level.

Scope of corporate tax simplified;

CT is applied;

• All businesses and individuals conducting business activities with a commercial licence in the UAE
• Free zone businesses that act by all regulatory requirements and do not conduct business on the UAE’s mainland will continue to be eligible for incentives.
• Foreign entities and individuals are not subject to CT on their trade or business conducted in the UAE unless they show work or business in the UAE in an ongoing or regular manner.
• Banking operations

Businesses specialising in real estate management, construction, development, and brokerage.

Exemptions;

• Businesses extracting natural resources will not be subject to CT as these businesses will remain subject to the current Emirate-level corporate taxation.
• UAE businesses that earn dividends and capital gains from their shareholdings will not be subject to corporate tax.
• Transactions occurring within a single group and reorganisations will not be subject to CT as long as the conditions are met.

Also, not applied to;

• An individual’s total salary and income from other employment, including public or private sector employment
• Income earned by a foreign investor from dividends, capital gains, interest, royalties and other investment returns
• Individuals funding real estate in their capacity
• Income received from owning shares or other securities in your capacity.

The UAE currently has no federal laws mandating CT. Tax decrees determine it at the Emirate level. The UAE levies corporate tax only on oil and gas companies and branches of foreign banks.

Further, the UAE benefits from the presence of more than 40 free zones, which have their own governmental rules. Companies incorporated in free-trade zones in the UAE generally enjoy significant tax benefits, making the country an attractive place to include. In the UAE, income tax is not assessed on employment-based income!

Why do you need us?

• To examine every aspect of a client’s business, including tax returns.
• Build strategies that allow you to avoid paying tax penalties.
• Keep all receipts, invoices and files in a single location to avoid confusion and keep track of your records.
• Help in maintaining all the financial records
• Assistance in renewing business licenses and other permits

Hiring us is an excellent alternative for professionals, especially when your income sources are diverse. You will have someone to help you understand the Dubai taxation policies, mitigate the associated risks, and take advantage of government incentives.