Corporate Tax

In simple words, Corporate Tax refers to a part of company’s net profits paid to the revenue authority …

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VAT, Customs & Excise

With increased globalization, the expansion of international business transactions and the regional …

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The UAE has enacted Economic Substance Regulations (ESR) and introduced a requirement for …

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The UAE is the third GCC country to implement CbCR following the introduction of transfer pricing …

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What will the UAE CT rates be?

The CT rates are:

  • 0% for taxable income up to AED 375,000;
  • 9% for taxable income above AED 375,000; and
  • a different tax rate for large multinationals that meet specific criteria set with reference to ‘Pillar Two’ of the OECD Base Erosion and Profit Shifting project

What will be the role of the Ministry of Finance?

Only one CT return will need to be filed per financial period. No provisional or advance CT filings will be required. A finThe Ministry of Finance will remain the ‘competent authority’ for purposes of bilateral/multilateral agreements and the international exchange of information for tax purposes.

What will be the role of the Federal Tax Authority?

The Federal Tax Authority will be responsible for the administration, collection, and enforcement of UAE CT.

Will UAE CT be applicable to businesses in each Emirate?

The UAE CT is a federal tax and will therefore apply across all Emirates.

Will a foreign company or individual be subject to UAE CT?

Foreign entities and individuals will be subject to UAE CT only if they conduct a trade or business in the UAE in an ongoing or regular manner.

Will income earned by a foreign investor be subject to UAE CT?

UAE CT will generally not be levied on a foreign investor’s income from dividends, capital gains, interest, royalties and other investment returns.

Tax Updates / FAQ

A collection on FAQs issued by the FTA, as updated on 22nd Feb 2022

Yes. More information on the registration process and ongoing compliance obligations for businesses will be provided in due course.

UAE businesses will need to comply with transfer pricing rules and documentation requirements set with reference to the OECD Transfer Pricing Guidelines.

Transfer pricing rules seek to ensure that transactions between related parties are carried out on arm’s length terms (i.e. as if the transaction were carried out between independent parties).

Foreign CT paid on UAE taxable income will be allowed as a tax credit against the UAE CT liability.
In case customers abroad deduct tax from sums payable to a taxpayer, such tax is referred as foreign tax deducted at source. In case of UAE, if such foreign tax is deducted on sums payable to a UAE taxpayer, one will get the tax credit for that.

UAE withholding tax will not be applicable on domestic and cross-border payments of any nature under the UAE CT regime.
In case, in-land customers deduct tax at source from sums payable to the taxpayer, such tax deducted at source becomes a tax credit and is deducted from CT due on Net Taxable Income of the taxpayer. It is not going to happen in UAE. In case, a UAE taxpayer were to deduct a certain amount of tax at source from sums payable to one’s vendors, the taxpayer would have had to pay said withholding tax to the FTA along with the CT due on its Net Taxable Income. This is not going to happen in UAE. In other GCC countries such as Oman, taxpayers are required to deduct tax at source on payments to foreign vendors. This will not be the case in UAE.

Withholding tax is tax collected at source by the payer on behalf of the recipient of the income. Withholding taxes exist in many tax systems and are typically used in respect of dividends, interest, royalties and similar payments.
Withholding tax is the building block of a special type of tax regime which is called Final Tax Regime (FTR), which is also known as Presumptive Tax Regime (PTR). While UAE CT law is not likely to have FTR, it is likely to have withholding tax deducted on certain payments such as payment to foreign vendors. The organization that deducts tax at source is referred to as “Withholding Tax Agent” and is subject to rules as stipulated by the revenue authority of the country in question.

How often will UAE businesses need to file a UAE CT return?

Only one CT return will need to be filed per financial period. No provisional or advance CT filings will be required. A financial period is generally a year. In case of other GCC countries such as Oman, a provisional tax return must be filed, and prescribed value of tax paid in the first quarter of the year subsequent to the tax year in question. This will not be the case in UAE.

Will the CT return need to be filed electronically?

The CT return will need to be filed electronically. Further guidance will be issued in this regard in due course.

Will businesses be required to pay tax in advance?

UAE businesses will not be required to make advance UAE CT payments.

Are there any consequences for non-compliance under the CT regime?

Similar to other taxes in the UAE (e.g. VAT), businesses will be subject to penalties for non-compliance with the CT regime. Further information on the UAE CT compliance obligations and applicable penalties will be released in due course.