Corporate Tax Services in Dubai, UAE

What is Corporate Tax in Dubai?

Starting from June 1, 2023, the UAE will implement a corporate tax of 9% on profits for businesses earning over 375,000 AED (approximately USD $100,000). If a business generates less than this amount, they will continue to have a 0% tax rate. Additionally, large multinational companies with profits exceeding EUR 750 million will be required to pay a 15% tax, aligning with the Global Minimum Corporate Tax Rate agreement. Companies need to be prepared for the new corporate tax, and most will have to allocate funds for tax payments starting from the tax year beginning June 1, 2023. For businesses with a tax year starting in January, the tax will apply to revenues generated from January 1, 2024, onwards.

Corporate Tax UAE Information

The UAE has long been regarded by company owners and investors as one of the most profitable locations to launch a new venture.

Due to the UAE’s extraordinarily stable political climate, advantageous location, fantastic business facilities, and, most crucially, the country’s 0% corporate tax policy, both big businesses and startups have preferred the country.

The UAE has the fifth-largest economy in the Middle East, per the International Monetary Fund (IMF). The nation has historically relied on its income from natural resources and oil, but in recent years, dependence on oil has been gradually declining

Difference Between Corporate Tax and VAT

Many firms mistook corporation tax for value added tax (VAT) when the UAE government originally announced the introduction of corporate tax. VAT and corporation tax are extremely dissimilar, nevertheless.
A consumption tax known as VAT is imposed on the purchase of goods and services. At the time of purchase, the customer pays it. On the other hand, corporation tax is assessed on the taxable income of businesses.
On their yearly net income, the corporations will be required to pay corporate tax. When clients purchase a good or service from a business, they pay VAT, which is subsequently sent to the government.
Corporate tax will be paid to the government directly and will be computed using the company’s net income rather than its overall revenue or sales volume.
Let’s learn more about the taxation procedure now that we are aware of what corporate tax is in the UAE and when it will go into effect.

Subjects to Corporate Tax UAE

All companies doing business in the UAE will be subject to the new tax laws starting on June 1, 2023, according to the UAE Ministry of Finance (MOF). Based on how they record their financial year, firms will have different tax calculations for the following periods

Corporate Tax Services Procedure in Dubai

Our Corporate Tax Service helps you smoothly apply Corporate Tax to your business while following tax laws, submitting tax returns, and offering full tax assistance through these steps.

1. Assessment of Tax Obligations: A tax consultant will examine your business activities, financial records, and other relevant data to identify the taxes your business must pay.
2. Tax Planning: Using the assessment, the tax consultant will suggest tax-saving strategies and chances to reduce your tax obligations.
3. Preparation and Filing of Tax Returns: The tax consultant will create corporate tax audited financial reports and submit Corporate tax returns for your business, ensuring accuracy and compliance with tax laws.
4. Payment of Taxes: Ensuring your business pays taxes on time and in the correct amounts.
5. Representation in Tax Audits: If your business faces a tax audit, the tax consultant will stand for your business, providing assistance and guidance for a smooth process.
6. Ongoing Support and Advice: Continuous support and advice on tax-related matters to maintain your business's compliance with tax laws.

Cost of Corporate Tax UAE

The MOF, which oversees the company tax in the UAE, has developed a taxing strategy with three taxation tiers, which are:

1.  Companies with annual net profits up to AED 375,000: subject to zero percent tax
2.  Companies having net annual profits greater than AED 375,000: subject to a tax rate of 9%
3.  Major international corporations: Pillar Two of the OECD Base Erosion and Profit Shifting initiative is subject to a different taxation regime. This category will include businesses with a total annual global revenue of exceeding EUR 750 million, or around AED 3.15 billion

Corporate Tax for Free Zone Businesses

Over the past few decades, the UAE has created more than 60 economic free zones to attract foreign investors and companies to the nation. Numerous investors have established businesses in UAE free zones in order to take advantage of the country’s zero tax, 100% ownership, and lenient profit repatriation rules.

The UAE government has made an exception with regard to the corporate tax rate for free zone enterprises in order to keep its commitment to support a business-friendly environment in free zones.

The UAE free zones will continue to be tax-free in accordance with this exception. Businesses operating in free zones must nonetheless submit a complete and accurate taxation report with no corporate tax in order to comply with government regulations. Due to their compliance with all other legislative regulations, businesses operating in free zones will benefit from this 0% corporate tax benefit.

Corporate Tax for Freelancers

Individual income is not subject to company tax, according to MOF. You might therefore wonder if the government will treat independent contractors as people or as legal entities.

According to the corporate tax policy, any organisation that needs a business license in the UAE will be taxed. Professional, commercial, and industrial licences are the three primary categories of business licences.

Due to the simple taxation and abundance of numerous accessible and adaptable coworking spaces, the United Arab Emirates and Dubai are popular travel destinations for many freelancers.

However, you will require a professional licence as a freelancer in order to work as an independent professional or freelancer in the UAE, which will automatically place you under the tax regime.
Therefore, as a freelancer, you must pay 9% corporate tax for the relevant revenue amount if your yearly income exceeds AED 375,000.

Exemptions to the Corporate Tax Laws

Additionally, the MOF has disclosed a few exemptions for specific organisations. You won’t be required to submit a tax return and make tax payments if your company or institutional endeavour qualifies for one of those exemptions. The exempt organisations are:

• Any governmental or public organisations, including all divisions, offices, and other public institutions at the federal, state, and local levels.
• Any organisations that promote social and charitable issues.
• Any UAE businesses that are listed and wholly controlled by the UAE government are eligible for the tax exemption.
• Companies in the United Arab Emirates that are involved in mining or resource exploitation.
• Any regulated governmental or private organisations that deal with social benefit funds, such as retirement or pension plans.
• Regulated investment funds for real estate and other things.