The implementation of the federal Corporate Tax (“CT”) regime in the UAE will have a significant impact on UAE businesses.
We have outlined below those key aspects from a practical perspective that we believe will play a vital role in assessing, analyzing, and implementing the CT provisions in relation to their businesses.
FIGURE OUT THE APPLICABILITY OF UAE CT
UAE-incorporated entities except those engaged in the extraction of natural resources, but including:
DETERMINE THE TAX PERIOD
As the effective date is 1 June 2023, the tax periods will be as follows:
CHECK OUT THE CT RATE
Free Zone - 0% - subject to conditions
Others - Taxable income up to AED 375,000 - 0%
Above AED 375,000 - 9% or higher rate for large multinationals
DETERMINE TAX PROVISION
-Accounting profit as per the IFRS or alternative financial reporting standards is the base
-Treatment of unrealized gains or losses
-Adjustments for exempt income and expense deductions
-Set off brought forward tax loss
-Net taxable income taxed at the applicable CT rate reduced by foreign tax credit and withholding tax
FREE ZONES
INCREASED FOCUS ON RELATED PARTY TRANSACTIONS
EXAMINE BENEFITS OF TAX GROUP
To form a Tax group:
Comparative analysis of tax cost for individual entities vis-à-vis tax group
COMPLY WITH TAX REGISTRATION AND FILINGS
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