A direct tax on the net income or profit of corporations and other businesses is known as corporate tax.
This is also known as the “Corporate Income Tax” or “Business Profits Tax“.
We know that the UAE will impose a Corporate Tax (CT) on June 1, 2023, at the start of the fiscal year. Everyone is debating and attempting to figure out the effects of CT on businesses, individuals, the government, and the overall economy.
This article discusses how CT affects key stakeholders.
The introduction of Corporate Tax would include implementation, training, and bureaucratic compliance costs, which would be fair considering the UAE’s simple tax system. Businesses will undoubtedly focus on tax planning to reduce the impact of CT on their profitability, increasing the demand for tax specialists.
The shareholders will strive to maintain their share of profits by passing on the impact of CT to end users through higher sales prices, making things a little more expensive for end users, which will adversely impact their purchasing power.
Reduced purchasing power would impact demand for products and services, and the trickle-down effect would be on business production and sales, affecting economic growth in the near run.
The introduction of Corporate Tax in the UAE would greatly impact Foreign Direct Investment (‘FDI’) decisions. It creates a gap between the pretax and post-tax returns on FDI. Investors are always interested in learning about direct taxes in the country where they wish to invest and taxes on profit repatriation.
As explained above, enterprises will likely pass on the impacts of Corporate tax to individuals by raising their prices and reducing consumers’ purchasing power. Employees would ask for a raise in wages to maintain their purchasing power. Overall, goods and services become marginally more expensive for end users.
Due to its competitiveness, UAE Corporate Tax would have a nominal impact on corporate savings and FDI, harming the country’s economy in the short run. Still, it would build investor confidence in the long run, contributing to growth. Considering all of the preceding,
CT has been designed to promote investment and maintain openness to match global standards, hence providing a stable society in which enterprises may contribute and add value to the economy’s growth. Text us on whatsApp or call us today for more details. for any corporate tax assistance required. Our experienced and professional team can assist you with all services you need.
A non-resident entity will only be taxed in the UAE on:
In filing corporate tax returns, a company is obligated to submit a return to the relevant taxation authority. The return should detail the company‘s income, expenditure, and all other relevant data relevant for the applicable tax period.
The return should be filed within the timeframe stipulated by Corporate Tax Law. Additional information or documentation requested by the tax authorities should also be provided.
The corporate tax returns of taxpayers in the UAE have to be filed within nine months from the end of each 12-month Tax Period, which would coincide with the financial year.
Tax Period Defined
Tax period: June 1, 2023 to May 31, 2024.
Return Filing Period: May 31, 2024 – February 28, 2025. 9 months.
In this regard, businesses will have to retain records of financial transactions for a period that satisfies tax reporting obligations.
Tax Period: January 1, 2024 – December 31, 2024.
Return Filing Period: January 1, 2025 – September 30, 2025 (9 months).
Return with supporting documents need to be submitted during this period
Tax Period: April 1, 2024 – March 31, 2025.
Return Filing Period: April 1, 2025 – December 31, 2025 (9 months).
Be in compliance and file returns with supporting documents before the close of this period.
Failure to submit tax returns or fulfill tax obligations by the set time may result in several consequences depending on the place and relevant tax laws. Usually, tax bodies impose penalties or surcharges on a late or defaulted submission. These charges are mostly determined by the length of the delay and the amount of outstanding tax.
In general, all revenue expenditures paid for business purposes should be permitted as a deduction when calculating taxable income.
However, the corporate tax regime in the UAE, as outlined in the public consultation paper, includes a list of items that will not be recognized as deductions for calculating taxable income:
Unicorn Global Solution is a professional firm that provides accounting services to businesses all around the UAE. The slightest mistake in the form may lead to starting all over again. For this reason, contact us to get best VAT Registration service in Dubai as it boasts a team of professionals who ensures that your company’s documents are transparent, up to date, and professional.
Our team will ensure that our prices are competitive, you're getting best deal possible.
We offer license issuance services to you get licenses and permits as soon as possible.
Our team will ensure that our prices are competitive, you're getting best deal possible.
With the fee policy, you can rest assured that you're getting the best high-quality deal.
We work every step closely with our clients to their unique needs customized solutions.
Tailoring Compliance Services To Match The Specific Needs Of Businesses.
Any foreign investor wishing to open a firm in any of the UAE's mainland regions must have a local sponsor. Additionally, the sponsor needs to own at least 51% of the business's equity. When can you go without a sponsor? There is no requirement for a local sponsor if you are establishing a business in the United Arab Emirates free trade zone.
Obtaining a business license, obtaining a UAE residence visa, and opening a corporate bank account are the three primary processes required to launch a business in any UAE Free Zone. The entire business establishment process should take one to four weeks if it is well-planned.
When starting a business, entrepreneurs have the option of flexible desks or office spaces, and IFZA visa fees are among the lowest in the UAE. In general, IFZA is a great option for business owners searching for a strategic and affordable place to locate their enterprise in the United Arab Emirates.
For free zone enterprises to rent an office in the mainland, the most important prerequisite is to obtain a NOC (No Objection Certificate) from the appropriate UAE free zone government. The procedures set forth by the relevant free zone authorities in the United Arab Emirates govern how to get a NOC from a free zone.
Yes, it is crucial to decide on your business's sector and line of operations before beginning the Dubai company creation procedure. Some regions in the United Arab Emirates permit particular
commercial activity.
UAE, Emirates, City`s names, Districts, and Airports Codes of UAE are Restricted. - The trade name cannot start with "international" "Middle East" "Global" etc... Nor can it be translated.
You can launch and operate your own business in Dubai as a non-resident with the right advice from professionals like Trade License Zone, and you can do it from anywhere in the globe.
In IFZA, the initial startup costs for businesses are AED 14,900*. There are zero visa packages and six visa packages among them. The Dubai Department of Economic Development (DED) is the source for all economic activity allowed in the International Financial Zone (IFZA).
