Corporate Tax Consultant in Dubai, UAE

Tax Agent

In order to adapt with the constantly changing international tax rules to provide greater transparency and comply with regulations in an effective manner, the Dubai, UAE has proposed and subsequently decided to introduce Corporate tax with lowest tax rates at the global level. This will come into force for the financial year June 2023 or post that.

Corporate tax in Dubai, UAE comes as an entirely new addition to the existing taxes in the Dubai, UAE and many businesses will therefore the necessity for Corporate Tax Consultant in Dubai, UAE comes into play. Corporate Tax Implementation in Dubai, UAE will give the companies to level up to the road ahead in bringing in companies under the Corporate tax purview, while lowering regulatory burdens for firms and start-ups.

Why Corporate Tax in Dubai, UAE?

Corporate Tax Implementation in Dubai, UAE has been proposed for various reasons. A few of them have been highlighted below:

  • To increase the status of Dubai, UAE as a major commercial and investment centre in global eyes
  • To effect and speed up the development and transformation in Dubai, UAE to meet its strategic goals effectively
  • To comply with transparency regulations in international trade
  • To minimize the dependency on oil as a major revenue source

Corporate Tax in Dubai, UAE:

The scope of Corporate Tax in Dubai, UAE is somewhat widespread covering major business

  • Businesses incorporated in Free zones and not operating or conducting business with the Dubai, UAE mainland.
  • All businesses incorporated in Dubai, UAE except those involved in the production of natural resources
  • Banking sector except branches of foreign banks. 

Corporate tax implementation in Dubai, UAE:

  • “Business Activities” covers the entire gamut of operations carried on by any legal body. Therefore, any income arising due to the activities carried on by a legal body is liable to the corporate tax framework in Dubai, UAE.

Income exempted from Corporate Tax in Dubai, UAE:

The following income are exempt from Corporate tax and are therefore not subject to CIT

  • Income from Dividends earned by overseas investors and qualified shareholdings obtained by a Dubai, UAE firm (yet to be defined in the law)
  • Income arising due to interest, royalties, capital gains, and other investment gains earned by overseas investors
  • Qualifying intra-group transactions and reorganizations as far as the conditions are met
  • Income arising on account of natural resource exploitation
  • Profit of Branches of Foreign banks
  • Foreign businesses and individuals if there are no continuous or frequent business activity in the Dubai, UAE
  • A DIFC or ADGM incorporated firm.
  • Individuals having income generated from employment, real estate, investment in shares or other personal income not associated with Dubai, UAE trade or business. However, business income earned by an individual holding commercial license and income earned by a freelance professional with permit will be subject to Corporate Tax in Dubai, UAE.

Proposed Corporate Tax Rates in Dubai, UAE:

The Corporate Tax rate in Dubai, UAE have been classified into various slabs and a certain percentage of Dubai, UAE corporate tax rate has been specified for each slab. Accordingly, for taxable income up to AED375,000, the tax rate is nil, and a 9% tax rate applies for taxable income over AED375,000. It may be pertinent here to note that AED375,000 = US$102,095. Further, Large Multinational corporations with consolidated global revenue exceeding € 750 million (AED 3.15 billion) subject to OECD Base Erosion and Profit-Sharing laws Pillar 2 of the BEPS 2.0 framework will be entitled to different rates

Corporate Tax Return

All businesses in Dubai, UAE will have to file a CT return annually and through electronic mode of filing failing which they will be liable to pay penalty.

Corporate tax in Dubai, UAE impact analysis

Dubai, UAE is considered as tax haven for businesses and foreign investments. However, this tax haven is now about to implement Corporate Tax. Although one might say this might discourage investment and cease to attract international corporations, the proposal to implement Corporate tax in Dubai, UAE has one of the world’s lowest corporate tax rates at the global level. With this competitive tax policy, Dubai, UAE may still be a desirable location for multinational companies leveling itself up to transparency and dynamic international practices.

Once the implementation of Corporate Tax in Dubai, UAE takes effect, there is bound to be a major change that is expected in the tax and compliance outlays of most Dubai, UAE businesses. The new regime requires an accurate identification of tax implications to the specific corporate structure of the entity and entities must be compliant with this new tax regime.

Businesses registered in Free Zones and not operating a business with the mainland will be getting the benefit of corporate tax incentives depending on the respective regulations and an annual return is required to be submitted for all free zones.

The impact of implementation of Corporate tax in Dubai, UAE is not restricted only this and extends to corporate mergers and acquisitions. The government’s objective in implementation of Corporate tax is to restructure the economy of Dubai, UAE by reducing its dependency on oil and gas and to establish itself in the field of digitalization and technology.

Corporate Tax Consultant in Dubai, UAE

As Corporate Tax Consultant in Dubai, UAE, we provide the following services in this regard:

  1. Corporate Tax Advisory services:

As Corporate Tax Consultant, we assess the applicability and impact of Corporate Tax implementation in Dubai, UAE on business, Free Zone (including FFZ) entities. We advise on withholding taxes and exemptions that can be availed. Further, we advise on Corporate Tax for transactions pertaining to group entities and the various risk areas and challenges faced by taxpayers.

  1. Compliance Services:

As part of compliance services, we assist in registration for Corporate Tax and computation of taxable income subject Corporate Tax in Dubai, UAE. Subsequently, we assist in computation of the tax liable and preparation and filing of tax returns.

  1. Representation services:

As part of Representation services, we help our clients by preparing the written submissions to be furnished, filing of response against the notices received, filing of written appeal against the adverse tax adjustments made or penalty imposed by the tax authorities in respect of Corporate Tax implementation in Dubai, UAE. We further represent our clients before tax authorities thereby enabling our clients to focus on their businesses.

Leave a Reply