Corporate Tax Services in UAE
Though the Emirates is primarily a tax-free country, some businesses need to pay taxes if they match the set criteria. The UAE has introduced new corporate tax laws, causing many businesses to struggle with unfamiliar rules and regulations. Our experienced tax professionals at RIZ & MONA CONSULTANCY are here to help you understand how these rules apply to your company.
We are a team of experts skilled at making sure your business maximizes tax reliefs and exemptions, meets all the necessary requirements on time to stay safe from harsh penalties, and finds ways to reduce your taxes.
We can assist you from the start of setting up your business for corporate tax to the careful filing of your tax documents. Our dedicated team will guide you through each step to make the process efficient and smooth. Let us learn more about Corporate tax in Dubai, UAE.
What is Corporate Tax in UAE?
Businesses established in the United Arab Emirates will be required to pay a tax on their taxable income known as corporate tax. Starting from June 1, 2023, the new tax policies will be implemented, and many businesses operating in the UAE mainland will be liable to pay taxes depending on their net profit per year.
Things You Must Know About Corporate Tax
To meet the requirements of the new corporate tax scheme in the UAE, every business must complete three tasks. Even if a business is not obligated to pay corporate tax, it is still necessary to go through the registration process and fulfill these steps to confirm eligibility for tax exemption.
The three tasks are as follows:
- Starting from June 2023, businesses need to register for corporate tax.
- Businesses must submit their corporate tax information to the Federal Tax Authority.
- It is important for businesses to maintain accurate accounting records.
Reasons for Corporate Tax Services in UAE
In the UAE, the government has established certain tax regulations and laws that businesses must follow. Corporate tax is imposed at a rate of 0% for taxable income up to AED 375,000 and at a rate of 9% for taxable income exceeding AED 375,000.
However, large multinational corporations that meet specific requirements related to the ‘Pillar Two’ of the OECD Base Erosion and Profit Shifting initiative will be subject to a different tax rate. Corporate tax services assist companies in navigating this complicated tax system and ensuring compliance with tax laws and regulations.
Using corporate tax services in the UAE offers several benefits, including:
- Access to professional guidance regarding tax concerns
- Accurate submission and calculation of taxes
- Adherence to tax regulations and laws
- Reduction of tax burden through effective tax planning
- Prevention of penalties due to non-compliance
As the implementation of UAE Corporate Tax approaches in June this year, businesses throughout the UAE are preparing for it by strengthening their strategies and goals, as well as ensuring compliance with tax regulations. Each business is required to prepare and submit only one UAE corporate tax return, along with relevant supporting schedules, to the Federal Tax Authority (FTA) for each tax period.
Furthermore, corporate tax services can assist businesses in making well-informed decisions by providing insights into the tax implications of various business transactions. FTA-approved corporate tax consultants in Dubai, Who offer tax advisory and tax assessment services to help companies prepare for corporate tax.
UAE Corporate Tax Services by RIZ & MONA CONSULTANCY
Business Process Solutions
Technology can play a crucial role in enhancing overall process improvement by benefiting various departments such as accounting, HR, tax, and finance. We will conduct a SWOT analysis of your business and based on a thorough examination, we develop and implement SaaS-based technologies, operational procedures, and resource models. The ultimate aim of this endeavor is to enable well-informed decision-making and boost productivity through firm insights.
We can provide assistance in the following areas:
- Utilizing Robotic Process Automation (RPA)
- Business intelligence and data analytics
- Automating financial reporting and accounting systems
- Managing business insights and records effectively
- Enhancing business efficiency through technology-driven solutions
- Redesigning and implementing ERP systems specifically for corporate tax purposes
Corporate Tax Advice
Our team of business tax experts will give you advice on all corporate tax issues that could positively affect your company. This will cover the tax exemptions that can apply to your company and how to take advantage of them.
Most of the economic zones aim to generate revenue through taxation. Managing taxes can be challenging for businesses operating in many economic zones. Our services are tailored to address the unique challenges of your jurisdiction and meet your specific requirements, regardless of where you operate your company. We offer a comprehensive and well-coordinated approach to complex tax issues.
In addition to providing coverage across multiple jurisdictions, We will also assist you in making informed decisions with confidence, assessing risks, minimizing costs, and identifying lucrative opportunities.
Our practical guidance, combined with a robust tax compliance framework, helps you deal with problems related to transfer pricing, corporate taxes, and others. We own years of extensive industry experience and in-depth knowledge of various financial aspects, including business consulting, taxation, accounting VAT advice, and more.
Our services encompass the areas given below:
- Management of Effective Tax Rate (ETR)
- Tax planning in relation to the Corporate Tax rate
- Assistance in litigation matters
- Assessment of the impact of corporate taxes
- Corporate tax advisory
- Planning for operations in multiple countries
- Base Erosion and Profit Shifting (BEPS)
- FPI advisory and fund compliance
- Technology and consulting support
- Support for tax compliance
- Compliance support for trusts, individuals, family offices, and estates
Corporate Tax Registration
Our staff will help you register your company with the FTA for corporate tax and manage the due dates for all of your corporate tax responsibilities.
Tax Management Consulting
Our services are focused on facilitating smooth business operations, minimizing tax burdens, and ensuring compliance with new tax laws. Our team utilizes innovative technology to assist you in managing tax operations across multiple jurisdictions and meeting the evolving demands of the UAE market. We have many years of consulting experience in various aspects of financial services.
By implementing a well-coordinated tax strategy supported by an execution roadmap, we take help from our dedicated tax management specialists to address your critical tax strategies. The challenges include reporting, compliance, and risk management related to various types of taxes. we do a thorough analysis to provide international outsourcing capabilities, develop a robust strategy, and aid in process and technology transformation for our client’s businesses.
Our range of services encompasses the following areas:
- Defining and implementing capital structure, TP policies, operating models, tax functions, and more.
- Advocacy on behalf of organizations in tax-related matters, covering assessments, appeals, as well as cases involving seizure and search.
- Ensuring compliance with tax obligations arising from ESR law and legislation and corporate tax.
- Proficiently handling advance tax calculations.
- Promptly filing returns pertaining to different applicable taxes such as VAT.
- Preparing your business for Corporate Tax Audits.
- Expertise in transfer pricing and global taxation.
- Training staff and evaluating business preparedness.
- Smooth management of corporate tax transitions.
Corporate Tax Returns
Our staff will evaluate your corporation’s tax situation, make sure your company receives the best possible tax treatment, and submit all required paperwork to the FTA on a yearly basis.
Ever since Corporate Tax was introduced, adherence to the transfer pricing process has become paramount for companies. In the Emirates, businesses are obligated to fulfill documentation requirements and comply with transfer pricing regulations. The Federal Tax Authority (FTA) will diligently examine TP policies, procedures, as well as inter-group and inter-company transactions.
We have extensive years of experience in the finance and accounting field. We will ensure that all your transfer pricing needs are met, facilitating seamless international business operations.
- Assessment of transfer pricing risks.
- An in-depth examination of cross-border financial transactions concerning Corporate Tax.
- Exploration of legal restructuring options for perfect growth of Freezone and Mainland companies.
- Evaluation of BEPS readiness and contract analysis.
- Verification that transactions (between enterprises under common ownership) align with the arm’s length principle.
- Adherence to OECD Transfer Pricing Guidelines.
- Establishment of tax-efficient Supply chain management.
- Development of transfer pricing policies.
- TP evaluation for all economic zones where you run your business.
- Comprehensive transfer pricing documentation – Country-by-Country Report (CbCR), Master, and Local File.
- Assessment of the relevance of the CbCR, Local, and Master File.
Process of Corporate Tax Services in UAE
RIZ & MONA corporate tax services are designed to assist you in seamlessly incorporating Corporate Tax into your business operations while maintaining compliance with the tax regime. We offer comprehensive tax support following the steps given ahead:
Review of Tax Obligations
Our experienced tax consultants will thoroughly review your financial records, business activities, and relevant information to find out the specific taxes your business is obligated to pay.
After reviewing your tax situation, our tax consultants will provide expert advice on strategies for saving taxes and identify opportunities to minimize your tax liability effectively.
Preparation and Filing of Tax Returns
We will meticulously prepare audited financial reports and ensure the accurate filing of corporate tax returns on behalf of your business while adhering to all tax regulations and requirements.
Timely Payment of Taxes
We will ensure that your business fulfills its tax obligations by making timely and accurate tax payments in accordance with the relevant tax laws and regulations.
Representation in Case of Tax Audits
At the time of the tax audit, our proficient tax consultants will act as representatives for your business, offering guidance and support throughout the audit process to ensure a smooth and hassle-free experience.
Continuous advice and support
We provide valuable advice and continuous support on tax-related matters to ensure that your company remains up-to-date and fully compliant with all relevant tax regulations.
With our Corporate Tax Services, you can rest assured that your tax requirements will be handled efficiently and professionally, allowing you to focus on the core aspects of your business.
Background of Corporate Tax UAE
The UAE has consistently been regarded as an extremely profitable destination for investors and entrepreneurs worldwide when it comes to establishing new businesses. Whether it’s large corporations or startups, the UAE has been highly favored due to the absence of corporate taxes at a rate of 0%, its remarkable stability in the political sphere, its outstanding business infrastructure, and its strategic geographical location.
As per the International Monetary Fund (IMF), the UAE boasts the fifth-largest economy in the Middle East region. Although the country has traditionally relied on revenue generated from oil and natural resources, there has been a gradual decrease in its dependence on oil in the past few years.
Objectives of the New Corporate Tax in the UAE
The implementation of corporate tax in the UAE is driven by the following goals:
- Enhancing the UAE’s standing as a globally renowned hub for investment and commerce.
- Facilitating the rapid transformation and development of the UAE in order to attain its strategic goals.
- Avoiding unfavorable tax implications and ensuring compliance with international tax transparency standards.
Is VAT and Corporate Tax the Same?
When the UAE government initially announced the introduction of corporate tax, many businesses mistakenly equated it with Value Added Tax (VAT). But it is crucial to understand that corporate tax and VAT are fundamentally distinct from one another and are not the same.
Corporate tax is levied on the taxable income of businesses. Conversely, VAT is a type of consumption tax imposed on the sale of goods and services, with customers paying it at the time of purchase.
Businesses collect VAT from customers during service and product transactions and subsequently remit it to the government. In contrast, under the corporate tax system, companies are required to pay taxes on their yearly net profits.
Corporate tax payments are made directly to the government and are calculated based on the net income of the business, rather than the total revenue or sales volume.
Who Will Be Subject to Corporate Tax UAE?
As per the UAE Ministry of Finance (MOF), all legal business entities operating within the Emirates will be subject to the new tax regime starting from June 1, 2023, onwards. The tax calculation for businesses will vary depending on how they report their financial year, as outlined below:
- Companies that report financial years from January 1 will begin tax calculation from January 1, 2024.
- Companies that report financial years from July 1 will commence tax calculation from July 1, 2023.
Other than some specific exceptions, every commercial activity conducted within the country will be required to register and submit corporate tax.
The MOF has introduced several exemptions for specific business entities. If your company or business venture falls into one of these categories, you are not required to file a tax report or make tax payments. The legally exempt business entities are as follows:
Certain UAE-Owned Companies
UAE companies that are fully owned by the UAE government and have been listed with a ministry-level decision granting tax exemption.
Governmental or Public Entities
This includes regional and federal offices, divisions, departments, and many other public institutions.
Regulated Investment Funds such as Real Estate
Just like charitable organizations, these funds must apply to both the Federal Tax Authority (FTA) and the MOF to obtain formal exemption approval.
Businesses Involved in the Mining or Extraction of Natural Resources
They are not required to file a separate corporate tax report because these businesses are already subject to Emirate-level taxation.
Certain Regulated Private or Public Entities
Some regulated private or public business entities that manage retirement planning, pension, and many other social benefit funds are exempted from taxes.
Charitable and Social Organizations
Social and charitable organizations don’t have to pay taxes but they must register with the MOF. Before applying to the MOF for registration, eligible entities must first apply for formal clearance from the relevant authorities.
If your business falls within any of these exempt categories, you are not obligated to fulfill corporate tax requirements.
- Companies are mandated to maintain different records such as financial records in order to meet the requirements of the CT return and other documents submitted to the Federal Tax Authority (FTA). Furthermore, businesspeople who have been granted specific exemptions are also obligated to maintain records that enable the FTA to confirm their exemption status.
- The requirement for independent auditing of financial statements will be determined by relevant regulations and laws. But business owners having businesses running in the free zones must own audited financial statements in order to qualify for the UAE Corporate Tax (CT) regime.
Corporate Tax Amount in the UAE
The UAE Ministry of Finance (MOF), the regulatory authority overseeing the UAE corporate tax, has implemented a taxation policy comprising three distinct tiers, which are as follows:
Businesses with Net Profit Per Year Exceeding AED 375,000
These businesses are subject to a 9% tax rate.
Large Multinational Companies
This category of companies falls under a separate taxation policy known as ‘Pillar Two’ of the OECD Base Erosion and Profit Shifting project. Companies with total global revenue surpassing EUR 750 million (equivalent to AED 3.15 billion) fall into this category and will be subjected to specific tax regulations.
Businesses with Net Profit Per Year of Up To AED 375,000
These businesses are subject to a 0% tax rate.
Corporate Tax for Freelancers
The UAE, including Dubai, has become an appealing destination for freelancers due to favorable tax conditions and the availability of flexible and affordable coworking spaces.
As per the UAE Ministry of Finance (MOF), individual income is not subject to corporate tax. However, when it comes to freelancers, it is important to determine whether they will be considered business entities or individuals.
Under the corporate tax policy, any entity that requires a business license in the UAE will be liable for taxation. There are three main types of business licenses: industrial, professional, and commercial licenses.
If you wish to operate as a freelancer or an independent professional in the UAE, you will need to obtain a professional license, which places you under the tax regime.
Therefore, as a freelancer, you will be required to pay the 9% corporate tax on the applicable income amount if your annual income exceeds AED 375,000.
Corporate Tax for Free Zone Businesses
Over the past few decades, the UAE has established over 60 economic free zones to attract global businesses and investors to operate within the country. These free zones offer numerous advantages, such as 100% ownership, zero tax, liberal profit repatriation policies, and more. As part of its commitment to maintaining a business-friendly environment in these free zones, the UAE government has made a special provision about the corporate tax rate.
This exception lets businesses operating in UAE free zones continue to be exempt from corporate tax. However, in order to adhere to government policies, these free zone businesses are still required to submit a comprehensive and accurate tax report, indicating a 0% corporate tax liability. By fulfilling all other governmental requirements, companies operating in the free zones can enjoy the benefit of 0% corporate tax.
Tax Exemption and Deductions for Dividends and Capital Gains
The UAE Ministry of Finance (MOF) has announced that companies may be eligible for tax deductions and exemptions in the following two scenarios:
Capital Gains From The Sale Of Shares Of A Subsidiary Company
Companies may also be exempt from tax on capital gains generated from the sale of shares of a subsidiary company that they own.
Earnings from Dividend Payments
Companies may qualify for a tax deduction on earnings received as dividends.
To qualify for these benefits, the UAE company must hold a minimum of 5% ownership stake in the subsidiary company operating abroad. However, the ownership requirement may vary for specific countries.
For example, in the case of the UK, the UAE shareholder entity must own at least 10% of the ordinary shares of the UK company for a continuous period of ten months to be eligible for tax-deductible earnings.
Tax Deduction for Companies with Foreign Branches
The UAE government has provided options for foreign company branches operating in the UAE. These branches can choose one of the following alternatives:
Exemption Depending On Foreign Branch Profits
Businesses may apply for an exemption based on the profits generated by their foreign branches located outside the Emirates.
Foreign Tax Credit
If a company has a branch or office in another country, it can ask for a foreign tax credit for the amount of tax paid in that specific country.
Corporate Income Tax Applicable to Foreign Individuals & Entities
- Corporate Tax Services in the UAE will not be applicable to a foreign investor’s income from royalties, dividends, interest, capital gains, and other investment returns.
- Foreign persons and organizations that frequently conduct business in the UAE are subject to the corporation tax.
Deductions on Financing Costs
Finance and interest expenses incurred by businesses are deducted from income. For companies, the interest expense deduction is capped at 30%. This cap has been set by the taxing authorities in an effort to get enterprises to depend more on equity financing and less on risky debt financing.
With no cap, many businesses would try to take on a lot of debt in order to avoid paying taxes, which eventually puts stakeholders and investors in a hazardous scenario. Businesses can declare their losses as future tax-deductible expenses in addition to borrowing charges.
The Administration of Corporate Tax UAE
The Federal Tax Authority (FTA) has been given permission by the UAE Ministry of Finance (MOF) to serve as an agency for regulatory compliance and oversee the taxation system. Once a year, companies must file their financial report with their corporate tax return together. The IFRS or International Financial Reporting Standards, are generally followed by the majority of large and medium enterprises in the UAE. But the FTA allows a number of additional approaches to maintain the tax filing procedure straightforward for professionals and firms.
How to File a Corporate Tax and Financial Report
The registration process is somewhat similar to the way businesses apply for their TRN (Tax Registration Number) with FTA. All businesses must register with FTA, the Federal Corporate Tax Authority, in order to file their taxes. Businesses can finish the registration process online after registration is implemented. Businesses register for their Tax Registration Number (TRN) with FTAsimilar to the registration procedure is probably comparable. Businesses have nine months from the end of the fiscal year to complete their tax returns and financial reporting.
Probable Implications of Corporate Tax UAE
The implementation of company tax will increase the country’s appeal to foreign investors Additionally, it will contribute to the long-term diversification and sustainability of the UAE economy. It should be noted that the UAE did not institute corporation tax first in the Middle East and Gulf region. It should be noted that the UAE’s tax rate of 9% is still lower than many of the other international and regional economies.
The following rates are already in place in a number of countries:
- San Marino: 17%
- Kuwait: 15%
- Hong Kong: 8.5 to 16.5%
- Oman: 15%
- Ireland: 12.5%
- Qatar: 10%
- Gibraltar: 10%
- Bahrain: 46% for some specific sectors linked with the extraction of natural resources and 0% for others
- Montenegro: 9%
- Liechtenstein: 12.5%
- Singapore: 17%
- Saudi Arabia: 20%
Get Corporate Tax Services in UAE from RIZ & MONA CONSULTANCY
Keep up with the most recent changes from the UAE government to ensure that your firm is compliant with the impending regulatory and tax policy changes. You may also look for expert assistance from tax advisers to make sure your company is set up in the best possible way to manage the amount of corporate tax that must be paid.
At RIZ & MONA, a team of qualified specialists is available to assist you with registering your company with the appropriate tax authorities and to make business administration easier. With years of expertise, we are one of the top financial services companies in the UAE.
If you’re looking for a reliable company to assist you with corporate tax look no further. Call us at +971 4 5586339, Whatsapp us at +971 54 582 1012, or send an email to email@example.com to speak with our company tax experts.