Corporate Tax System in the UAE

UAE Corporate Tax system applies to juridical persons incorporated in the UAE and to foreign juridical persons that are effectively managed and controlled in the UAE . A foreign juridical person that operates in the UAE through a Permanent Establishment or that has a taxable nexus in the UAE would also be subject to Corporate Tax.

Natural persons will be subject to Corporate Tax only if they are engaged in a Business or Business Activity in the UAE, either directly or through an Unincorporated Partnership or sole proprietorship. Cabinet Decision No. 49 of 2023 specifies further information on what would bring a natural person within the scope of UAE Corporate Tax.

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Who is Considered a Resident for UAE Corporate Tax purposes?

UAE incorporated companies such as Limited Liability Companies, Private Joint Stock Companies, Public Joint Stock Companies and other UAE juridical persons will be subject to Corporate Tax as Resident Persons.

An entity that is incorporated in the UAE will automatically be considered a ‘Resident’ Person for the purposes of UAE Corporate Tax. Equally, a natural person who is engaged in a Business or Business Activity in the UAE will also be considered a Resident Person for UAE Corporate Tax.

A foreign company may be treated as a Resident Person for UAE Corporate Tax purposes if it is “effectively managed and controlled” in the UAE. All facts and circumstances must be considered in determining where a company is effectively managed and controlled, but a relevant indicator may include the place where the board of directors of the company make the strategic decisions affecting the company.

How are UAE Resident Subject to UAE Corporate Tax?

UAE resident juridical persons will be subject to UAE Corporate Tax on their income sourced from both the UAE and from abroad, although certain income earned through foreign subsidiaries and income of foreign branches that is subject to tax in another jurisdiction will generally be exempt from UAE Corporate Tax. 

Where income earned from abroad is not exempt, relief for income taxes paid in the foreign jurisdiction can be taken as a credit against the Corporate Tax Payable in the UAE on the relevant income to prevent double taxation.

Scope of Corporate Tax in UAE

The UAE has introduced a federal tax system that applies to all businesses and commercial activities operating within the seven emirates. However, there are certain exceptions:

  • Businesses operating in the extraction of natural resources. These will continue to be subject to the tax decrees issued by the respective Emirate
  • Individuals earning income in their personal capacity (i.e. salary, investment income) as long as the income-generating activity does not require a commercial license
  • Businesses registered in Free Trade Zones, provided they comply with all the regulatory requirements, and do not conduct business with Mainland UAE 

It is interesting to note that the foreign Banking sector, which has been operating under the Emirate level Bank tax decree will now be subject to the UAE Federal Tax Law. The impact of CT on the Emirate-level banking tax decree will be communicated in due course. This will be a significant shift for both branches of foreign Banks, which will need to switch to the new Law, and for local banks similar to other businesses will now be subject to corporate tax.

How Unicorn Global Solutions Can Assist

With Unicorn Global Solutions, navigating the sometimes complex maze of corporate tax compliance in the United Arab Emirates becomes a smooth experience. It is critical for businesses operating in the United Arab Emirates to comprehend and abide by corporate tax laws. Offering a full range of solutions to guarantee compliance and maximize tax efficiency, Unicorn Global Solutions specializes in corporate tax services catered to the particular requirements of businesses in the United Arab Emirates.

Corporate Tax Advisory Expertise

A group of seasoned tax experts with in-depth knowledge of UAE corporate tax regulations makes up Unicorn Global Solutions. Their professionals offer customized guidance to help firms negotiate the complexities of the corporate tax landscape in the United Arab Emirates, from comprehending the subtleties of federal and emirate-level taxes to managing VAT responsibilities.

Streamlined Corporate Tax Services

For companies of all sizes, Unicorn Global Solutions provides comprehensive corporate tax services that streamline the compliance procedure. Their streamlined method guarantees that businesses stay compliant while minimizing administrative burdens, whether it’s managing tax audits, filing corporate tax returns, or registering for VAT.

Proactive Corporate Tax Management

It’s critical to keep up with changes to business tax legislation in a changing regulatory environment. Proactive tax management services are offered by Unicorn Global Solutions, which also advises clients on possible effects on their tax obligations and keeps them updated on legislative developments. With their experience, companies can easily manage compliance and quickly adjust to changes. 

The right time has come to get in touch with UGS and take benefit of our unmatched corporate tax knowledge, particularly with our corporate tax offers. Working with us will give you access to innovative techniques that can reduce your tax obligations and improve your financial results.  Text us on WhatsApp or call us today

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