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TAXATION
TAXATION in UAE
The United Arab Emirates (UAE) has in recent times removed its traditional position of tax heaven on earth to tax jurisdiction back in 2018 due to implementation of indirect and direct taxation. However, effective 1 June 2023 a 9 percent corporate tax was initiated on taxable income that was above AED 375,000. The federal tax Authority (FTA) is the managing organ of the federal tax, such as VAT and corporate tax.
A brief description of the major types of tax to be imposed on enterprises and individuals in the UAE as listed in
snapshot below:
Types of Taxation in UAE
1
Value Added Tax (VAT)
2
Corporate Tax
3
Additional Exemptions
4
Excise Taxes
5
Personal Income Tax
6
Other Tax
Value Added Tax (VAT)
Implemented on January 1, 2018:
- Place of supplies standard rated supplies in UAE: 5%
- Zero rating of supplies on exports of goods and services and special residential properties.
- Value-added taxes are spared on certain Health Care Services, certain Financial Services, certain Public transport services, international transport, certain residential buildings, certain sale of bare land
- On some goods and services, reverse charge mechanism will be applicable.
In the UAE, there is voluntary VAT registration to companies that make taxable supplies or pay expenses of between AED 187,500 and AED 375,000 annually. This is to give the smaller firms and business startups a chance to register as VAT even when they have not yet met its required registration nucleus of AED 375,000
Corporate Tax
The UAE introduced a federal corporate tax effective from June 2023:
- 0% rate for taxable income up to AED 375,000
- 9% rate for taxable income above AED 375,000
- 15% top-up tax rate for large multinational enterprises meeting specific criteria based on OECD guidelines.
The corporative tax of the UAE took effect on financial years that ended on or after June 1, 2023. Businesses with free zone status can be exempted as long as they are qualified and do not transact business with mainland of UAE providing that the requirements of the said Federal Decree-Law No. 47 of 2022 are met.
The following categories of businesses are exempt from corporate tax subject to meeting the conditions laid down under corporate law;
- Small businesses with taxable income up to AED 375,000
- UAE government entities and government-controlled entities not conducting business activities under a license
- Businesses engaged in natural resource extraction, subject to Emirate-level corporate tax
- Non-extractive natural resource businesses meeting specific conditions
- Qualifying public benefit entities created for charitable, religious, cultural, athletic, healthcare, or educational purposes as stipulated under Cabinet Decision No. 37 of 2023
- Qualifying investment funds, Private Pension Funds and REITS under regulatory supervision and fulfilling conditions
Additional Exemptions
- Foreign branch profits from jurisdictions with UAE tax treaties based on election.
- Dividends received from other UAE corporations
- Capital gains on shares held for at least 12 months
- Participation exemption on certain foreign investments.
To maintain exemption status, entities must meet specific criteria and comply with regulations set by the UAE Corporate Tax Law.
Excise Taxes
The UAE levies excise taxes on specific products:
- 50% on carbonated drinks and products with added sugar
- 100% on tobacco products, energy drinks, electronic smoking devices, and vaping liquids
Customs Duties
- 5% flat rate on most goods (based on CIF value)
- 50% on alcohol
- 100% on cigarettes
Personal Income Tax
At the time, the UAE does not impose a personal income tax. Nevertheless, the natural person who carries out business operations subject to turnover above AED 1 million can be covered by the corporate tax rate of 9 percent.
Other Taxes
- On sale of alcohol and tourism, some emirates impose extra alcohol tax and tourism tax.
- In some of the emirates; flat corporate tax of 20 percent is charged on foreign banks
- Real Estate Department Levy on residential and commercial property transactions.
Why Choose ALPHA EQUITY MC?
At ALPHA EQUITY MC, we are aware that the compliance procedure in the UAE may be terrifying not only to business but to those which have to become increasingly at ease with local rules and regulations. This is our niche. We are a group of specialist professionals who offer full support depending on your claims. This is the reason why we excel:
- Expertise
Our team is competent with the UAE laws, compliance and regulations in the business sector as we have years of experience in the business sector. We maintain awareness concerning any changes or emerging in order to guarantee that your business is in full compliance.
- Personalised Approach
We understand that no business is similar, thus we address each client individually. Our team will stay with you throughout the process of consultation and until the time you sign-up, to get to know what you want what you need out of your business and how we can provide it, effectively.
- Efficiency
Time is of the essence in the business world, and we value yours. Our streamlined processes and efficient workflows ensure that your VAT Registration Process in UAE is completed promptly, allowing you to focus on what matters most – growing your business.
- Openness
Open communication and openness are always advocated by us. We will give you the undivided attention you deserve and will be able to give you the clear directions and clarify any doubts you might have and will keep you informed all along the way.
Contact us
Navigating the regulatory requirements in UAE doesn’t have to be a daunting task. With ALPHA EQUITY MC as your trusted partner, you can rest assured that your VAT registration, Uae Corporate Tax registration and compliance, AML requirements, and other compliances will be handled with professionalism, efficiency, and expertise. Let us take the stress out of compliance so you can focus on what you do best – running and growing your business. Contact us today to learn more about our services and how we can help you succeed in the UAE market.