United Arab Emirates and (4)
From 1 June of the year in which the decision was made
The corporate tax will apply to businesses in the UAE from tax years starting 1 June 2023. The higher profit limit of AED 375,000 has been set to support small and medium-sized businesses and start-ups and to make the economy more competitive, officials said. The taxable income limit is not determined on the basis of the company’s total turnover. On the other hand, the authorities have also clarified that the tax is payable only if the profit of the company reaches 3.75 lakh dirhams.
Tax not applicable, to whom?
Corporation tax does not apply to individual wages or compensation of employees. Furthermore, personal income deriving from bank deposits or savings programs and real estate investments made by individuals in a personal capacity are also exempt from taxation. The Finance Ministry pointed out that almost all countries levy corporate taxes on businesses to diversify government revenues.
Free zone companies have been excluded
Under the new Federal Tax Law, Free Zone companies in the UAE operating in accordance with the UAE Corporate Tax Law are exempt from corporate tax. Companies involved in the extraction of natural resources are also exempt. However, they will continue to pay the current Emirati tax. Government entities, pension funds, investment funds and charitable organizations are also exempt from corporate tax.
Tax records must be kept for seven years
The corporate tax applies to residents, non-resident individuals and free zone individuals earning more than Dh375,000 annually. If expats have a permanent establishment in the UAE, income from the sale of goods and provision of services in the country is also taxed at nine percent. Officials also said companies must keep income and tax records for seven years after the end of the tax period. Under the new law, annual corporate tax returns must be filed by all taxable persons within nine months of the end of the tax period. Group companies in the country can form a tax group, file a single tax return and pay taxes all at once, those working in the industry said.
The video preparations for the Tanka Anki procession have begun
Preparations have begun for the Thanga Anki procession
