The Corporate Tax Law was enacted on 30 August 2018 by the UAE Federal Decree-Law No. 7 of 2017 and came into effect on 1 January 2019, with VAT being introduced in the UAE on the same date. The Law applies to all companies registered in the UAE and foreign branches of companies operating in the country.
The major change businesses can expect there is the introduction of corporate tax on their profits. Under the old system, businesses were only taxed on their income from oil and gas extraction activities and foreign branches. With the introduction of corporate tax, businesses will now have to pay taxes on their total profits, regardless of the source.
Businesses can also expect changes in the way they file their taxes. Companies will now have to file their taxes quarterly instead of the previous annual filing. The first quarterly tax return is due on 30 April 2019, and businesses must file their taxes electronically through the Federal Tax Authority’s website.
Another change that businesses should be aware of is the introduction of penalties for late payment of taxes. Companies that do not pay their taxes on time will be subject to a fine of 2% of the unpaid amount per month.
Businesses can also expect changes in the way deductions are calculated. Under the new system, businesses can only claim deductions for expenses related to income-generating activities. Businesses can no longer claim deductions for general and administrative expenses, such as rent and utilities.
Finally, businesses can also expect changes in how tax refunds are processed. Under the new system, companies will no longer be able to get refunds for taxes paid in advance. Instead, they can only claim a refund for taxes paid during the year after filing their annual tax return.
Before making any decisions, you should consult a professional adviser to ensure you understand all the implications of the new corporate tax regime. Creation BC highlights of the UAE Corporate Tax Law for Business Owners and Corporations.
The UAE has a highly attractive corporate tax regime, with a flat rate of 20% and a wide range of exemptions and incentives. This makes it an appealing destination for businesses looking to expand their operations into the Middle East.
However, there are some important things to remember regarding corporate tax in the UAE.
Here are five things you need to know:
1. The UAE has a territorial tax system
This means that only income earned within the UAE is subject to taxation. This is different from many other countries, which have a worldwide tax system and tax businesses on their global income.
2. There is no capital gains tax in the UAE
This is good news for businesses looking to invest in the UAE. Any profits from selling assets such as property or shares will not be subject to taxation.
3. There is no withholding tax on dividends
Dividends paid by a UAE company to its shareholders are not subject to any withholding tax. This makes the UAE an attractive destination for investors looking to receive income from their investments.
4. The UAE has a wide range of double tax treaties
The UAE has double tax treaties with over 50 countries, meaning businesses can avoid paying taxes twice on the same income. This makes it easier for businesses to expand their operations into new markets without worrying about being taxed twice.
5. The corporate tax rate is 20%
The UAE has a flat corporate tax rate of 20%. This is lower than in many other countries, making the UAE an attractive destination for businesses looking to expand their operations.
The UAE’s corporate tax regime is highly attractive and offers several benefits for businesses. However, it is important to keep in mind that there are some important things to consider when it comes to corporate tax in the UAE. By understanding these five things, you will be better prepared to navigate the corporate tax landscape in the UAE.
If you are thinking of investing in the UAE, it is important to seek professional advice to ensure that you take advantage of all the opportunities available to you. Corporate tax is in several complex areas, and several rules and regulations need to be followed. Professional advice will help you to structure your business in the most tax-efficient way and ensure that you comply with all the relevant legislation.
Under the new regime, companies will be taxed on their profits at 55 percent. This is significantly lower than the 80 percent rate originally proposed. However, it is still higher than the rates in neighboring Gulf countries such as Bahrain and Qatar, which have yet to introduce corporate taxes.
The UAE’s decision to implement corporate taxes comes as other countries consider similar measures. Saudi Arabia, for example, has been studying the possibility of introducing corporate taxes as part of its wider tax reform efforts.
The UAE’s move to introduce corporate taxes is expected to have several impacts on businesses in the country.
First, it will likely lead to an increase in the cost of doing business. This is because companies will now have to pay taxes on their profits, which they did not previously have to do.
Second, introducing corporate taxes is expected to make the UAE more attractive to foreign investors. This is because many multinational companies often locate their operations in countries with lower tax rates.
Third, the new regime will likely encourage businesses to restructure their operations to minimize their tax liability. This could involve shifting operations to other parts of the UAE or countries.
Fourth, the corporate tax regime is also likely to impact the distribution of profits within companies. This is because taxes will now be levied on profits, which means that shareholders will receive less money than they would have under the previous system.
Finally, introducing corporate taxes is expected to create new jobs in the UAE. This is because businesses need to hire accountants and lawyers to help them comply with the new rules.
The UAE’s decision to introduce corporate taxes is a significant step forward for the country’s economy. It is hoped that it will make the UAE more attractive to foreign investors and encourage businesses to restructure their operations to minimize their tax liability. However, it is important to note that the full impact of the new regime will only be felt over time.
The UAE’s decision to implement corporate taxes is a significant step forward for the country’s economy. It is hoped that it will make the UAE more attractive to foreign investors and encourage businesses to restructure their operations to minimize their tax liability. However, it is important to note that the full impact of the new regime will only be felt over time. Implementing corporate taxes in the UAE is a complex process, and several rules and regulations must be followed. Professional advice will help you to structure your business in the most tax-efficient way and ensure that you comply with all the relevant legislation.
