The corporate tax regime in the Taxation of Corporations and Businesses has been replaced by a new corporate tax regime in the United Arab Emirates (UAE) that is a marking point of change in the taxation regime of the country.
The most important facts about the Corporate Tax Consultancy Services in Dubai are as follows:
Implementation and Rates
Applicability
The corporate tax applies to:
Exemptions and Special Provisions
Additional Tax for Multinational Enterprises
Large multinational enterprises (MNEs) found in the UAE will face a Domestic Minimum Top-up Tax (DMTT) starting January 1, 2025. This is in respect of MNEs whose consolidated world wide revenues are €750 million or as much in at least two of the four previous financial years.
The DMTT will seek to establish effective minimum tax of 15 percent on profits of these big MNEs
Compliance and Registration
Companies that are liable to provide Corporate Tax services in Dubai are required to register and file UAE corporate tax according to the FTA Decision No. 3 of 2024 on the Registration Timeline for Corporate Tax. The company uses the financial year to charge taxes.
Although a few details are yet to be announced, the Ministry of the Finance has provided FAQs to explain some aspects of the new tax regime.
Impact and Objectives
The introduction of corporate tax in the UAE is designed to:
Nevertheless, the tax imposition has further reduced UAE corporate tax compared to other economies in the world and this is an indication of its desire to reduce its taxes to attract and retain businesses thus the tax reduction.
UAE corporate taxation regime has been revised considerably, mainly due to the new efficient regulations applied to financial years beginning on or after January 1, 2025.
The Ministry of Finance is likely to publish additional information on the application and steps which should be taken with regard to the DMTT soon.
To guarantee compliance, maximize tax advantages, reduce risk, and simplify financial operations, the businesses in the UAE require the corporate tax services in Dubai. Joining the professional corporate tax consultants in Dubai would be esssential as a consultant can give you great expertise in planning the strategic tax planning. This way you can be sure that your business is compliant with the UAE tax laws. With the guide of professional consultants or audit firms and accounting firms in Dubai, one can guide his or her affairs in terms of taxation and reporting and this will aid in the overall success of your business finance-wise. An overall UAE Corporate Tax Impact Assessment is needed in order to find the optimum in savings and liability management.
UAE corporate tax enforces the practice of compliance of the business with the complex tax laws and regulations that are laid down by the authorities. This prevents the business to not only evade penalties but even the possibility of legal wrangles and troubles.
The knowledge of various laws on the UAE corporate taxes is quite wide among corporate tax consultants in Dubai and this enables them to provide accurate advice and assistance during tax planning, compliance and preparation processes.
Through employing corporate tax consultants in UAE, companies can discover the possible tax deductions, credits and taxes and therefore will be able to maximise their tax savings and ensure maximum allocation of financial resources.
Through Dubai audit firms, the tax audits in this city are also very helpful to business firms in that they keep them fully prepared and tax audit can be conducted without any form of violation to the stipulated requirements by the tax experts under that tax jurisdiction.
The role of internal auditors in Dubai is to ensure that business complies fully with taxes by identifying and responding to any kind of risk confronting the business.
The auditing companies in Dubai provide efficient solutions to tax management in a way that the issue relating to taxes becomes less complex and the burden of administration on business reduces.
Corporate tax services in the UAE are beneficial to the businesses as they can easily interact with the highly structured taxation laws and regulations stipulated by the government to avert possible consequences meted towards such businesses as well as the resulting legal implications.
There are a number of reliefs attached to section 22 of the conditions stipulated in the Federal Decree Law no. 47 of 2022 as regard to the corporate tax system in the country, depending on the cabinet and ministerial decisions.
Natural Person Relief
Corporate tax only applies to a natural person when his total turnover derived, through conducting business or business activities in the United Arab Emirates, is above AED 1 million in a Gregorian calendar year. When the turnover does not exceed this threshold, then the natural person does not have to register and pay the corporate tax on his or her business income. Slight business relief is available to a natural person.
Certain types of income are exempt from corporate tax for natural persons, including:
This kind of income is not put into consideration when calculating whether the turnover of AED 1 million has been reached or not
Double Taxation agreements
There is no conflict between the UAE Corporate Tax Law and International agreements such as, Double Taxation Agreements (DTAs) in the event of an inconsistency, preference is given to the international agreements. The agreements can be used by natural persons in order to prevent being taxed twice.
To conclude, exemptions on some categories of income, a taxable amount and special tax cutting devices available, such as Small Business Relief, are available to relieve or eliminate corporate tax liability of the natural persons in the UAE.
The Small Business Relief under the UAE Corporate Tax (CT) is a considerable advantage designed to support small and micro businesses in the UAE. Here are the key points related to this relief.
Overall, Small Business Relief aims to lower small businesses’ Corporate Tax obligations and compliance costs, allowing them to focus on growth and development within the UAE.
According to the Corporate Tax Law of the UAE, the tax loss is overseen with regards to the designated provisions that enable companies to match the losses against income that would turn out to be taxable to reduce the amount of tax that they would have to pay. The following can be described as the main characteristics of tax loss relief:
A tax loss is a situation which arises when the deductible amount or the expenses of a particular tax period are higher than the revenue hence leading to taxable negative income.
A tax loss arising in one tax period may be carried forward to the future tax periods and offset against the taxable income of the latter periods. This lowers the taxable income hence the tax payable.
Tax loss that may be set off in the later tax period could never exceed 75 percent of taxable income of that period
Carrying forward of tax losses is limited and the losses can be carried into the future taxation years. In the event that there is tax loss left in excess of the amount set against the taxable income of a period, then the tax loss can be carried forward into the next period
Tax losses may be sold to another chargeable person, but this requires appropriate conditions. The transfer is also limited to the 75 percent figure of the recipient taxable income
Transfer of tax losses may be claimed by a taxable person whose shares are listed on a Stock Exchange
No claim of tax loss relief can be made because of the loss incurred prior to the beginning of the UAE Corporate tax regime.
The earlier losses before entity became an entity under the Corporate Tax Law are also inadmissible.
Tax loss relief cannot be claimed on the losses incurred in activities or assets the income of which is exempted by the law
Limitations Tax losses cannot be carried back to previous tax periods; they can only be carried forward
The tax loss must be set off against the taxable income of the subsequent tax periods before any transferred tax losses are considered
By identifying and adhering to these provisions, businesses in the UAE can effectively manage their tax losses and minimise their corporate tax liabilities. It is advisable to consult tax professionals to ensure compliance with the latest regulations and to maximise the benefits of tax loss relief.
Qualifying Group Relief
The Qualifying Group Relief under the UAE Corporate Tax Law is proposed with the intention of the tax-neutral transfer of capital assets or liabilities between members of the same qualifying group. Here are the key requirements and effects of this relief:
Eligibility Conditions
Qualifying Group Relief is a valuable mechanism for tax-neutral restructuring within a group. It ensures that the overall ownership structure of assets or liabilities remains intact without incurring corporate tax liabilities. However, it is crucial to adhere strictly to the conditions and compliance requirements outlined by the FTA.
Tax Group Relief
Article 40 of UAE Corporate Tax Law permits two or more subsidiary companies to be treated as a single taxable entity for corporate tax purposes by forming a single tax group and filing a single corporate tax return.
Eligibility Requirements conditions for forming a Tax Group, the following conditions must be met:
To create a Tax Group, the following should be done:
The parent company and the individual subsidiary should jointly apply to Federal Tax Authority (FTA) to establish Tax Group
Once the application is received, the FTA will check to see that the set criteria are fulfilled. When this is approved, a given date will be set on which the Tax Group shall be constituted, which can be altered by the FTA.
The whole Tax Group will also have a Tax Registration Number and each member will need his or her personal Tax Registration Number as well.
Financial statements can be consolidated since the parent company can file a single Corporate Tax on behalf of all the members of the Tax Group, making it easier to administer tax
Automatic offsetting between losses incurred by one member against the income of other members of the Tax Group is possible.
The transactions between the subsidiaries and the parent company and between subsidiaries are all eliminated in the calculation of the Taxable Income of the Tax Group
The Tax Group members are jointly and severely liable regarding any corporate tax and administrative penalty. Nonetheless, the Tax Group is able to apply to the FTA to ensure that this liability is restricted to one member or a few other members
The parent company has to combine all the financial results, assets and liabilities of the subsidiaries so as to ascertain the Taxable Income of the Tax Group. This is done in by doing away with transactions amongst group members that will be used to determine the Taxable Income.
The creation of Tax Group can simplify tax compliances, optimise taxes, and reduce compliance cost within the United Arab Emirates.
The Participation Exemption of the UAE laws of Corporate Tax avoids the situation of taxation of corporate profits and double tax. It is applied subject to certain conditions summarised in Federal Decree-Law No. 47 of 2022 and elaborated by Ministerial Decision No. 116 of 2023 on conditions to Participation Exemption.
The person who has to pay a tax has to possess an interest of at least 5% ownership in the shares or capital of a juridical person either in terms of participation or aggregate cost of acquisition of more than AED 4 million.
It can also pass this condition by having the aggregate participation between all members of a qualifying group in the same participation equal to not less than 5%
Taxable person should retain or wish to retain the participating interest over continuous period a minimum period of twelve months
The involvement should be corporate tax or an identical tax on his or her country or territory of residence at a rate not less than 9%
In the event that the jurisdictional tax regime cannot use the 9 percent effective tax rate (ETR) to compute the effective tax rate of a charge, it can be recalculated as stated in the Corporate Tax Law of the UAE to achieve the 9% ETR requirement.
No more than 50% the straightforward and indirect resources of the participation may comprise of possession rights or privileges that would not have been qualified the participation exception in the event they had been owned directly by the taxable
The participation exemption applies to income such as dividends, other profit distributions,
capital gains, and foreign exchange and impairment gains or losses derived from the
participating interest
Exemption The exemption will not apply in the case of losses that are recognised when the participation is liquidated.
The computation of such losses is made using the costs of acquisition, partial as well as any disposal, and fair.
The exemption is not also applicable when the payer has a deduction interest in the dividend made by another person to the extent that the taxable person or its related party has recognised a deductible impairment loss in respect of the participating interest up to the time that it meets the exemption conditions
Article 27 of the UAE Corporate Tax Law has a Business Restructuring Relief provision, a provision that the UAE government created to allow the optimization of tax.
allows two types of restructuring transactions to be treated as tax neutral. Such a relief is meant to do away with
effect of the corporate tax on the target transactions which are carried out during business restructuring.
reorganisation.
Acquisition of a complete business or hollow segment of business by another Taxable One Individual to another.
Sale of a whole business between one or more Taxable Persons to another Transferor no more exists
Transfer of business is in line with UAE rules
The transferor and the transferee should either be companies, resident in the UAE or foreign companies which have permanent establishment in the UAE
Election In making the Corporate Tax return, the transferor chooses the relief to apply.
The transfer of assets and liabilities may be made under net book value and there will be either no loss or gain under corporate taxation
The transferor may transfer his unutilized tax losses to the transferee
The transfer consideration may be in form of either shares or other consideration, where a limitation will be placed on value
The relief is an election that gets done on filing of the corporate tax return
It does not need any other application
The transferor or transferee sells or disposes of shares (part of all) to someone (partial or complete) individual not in the qualified group
Article 27 is followed by a business restructuring
Participation Exemption: Ownership which is acquired based on a transaction that is presented under Article 27 requires no less than two years in order to have access to the Participation Exemption
Transactions may be qualified under Business Restructuring Relief and also qualify under Qualifying Group Relief provided certain conditions are satisfied.
A special legal regime provided in the Corporate Tax Law allows some of the businesses in Free Zones to enjoy a 0% corporate tax rate on eligible income. This relief is offered to entities that are regarded as the Qualifying Free Zone Persons
This is because a business will be classified as a QFZP in order to obtain the benefits of the 0% tax rate in case it meets the following criteria: (QFZPs), as long as they fulfil certain requirements and conduct qualifying activities. A business is considered eligible to be a QFZP and get the incentive of a 0% tax rate condition as follows:
A Juridical Person registered with a free zone.
Maintain adequate substance in the UAE
The entity should also possess enough operation presence within the Free Zone, which shows that it is not just a shell company. It should also possess sufficient assets and workers and engage in basic business processes within the area of the free zone as stipulated in the law.
Derive Qualifying Incomeas specified by the Cabinet
The income must come from activities qualifying under the Corporate Tax Law. This includes income from transactions with other Free Zone entities or certain foreign transactions. exceedthe lower of AED 5 million or 5% of total Revenue (de minimis requirement)
Not elect to be subject to standard Corporate Tax rates
To be considered a Qualifying Free Zone Person (QFZP) and benefit from the 0% Corporate Tax rate on Qualifying Income, a Free Zone Person must meet the following conditions:
Benefits for Qualifying Free Zone Persons
The primary benefit for QFZPs is the application of a 0% Corporate Tax rate on Qualifying Income
Preferential tax treatment specific activities and transactions
Exemption from the standard 9% Corporate Tax rate on Qualifying Income
Ability to conduct business with both Free Zone and non-Free Zone entities while maintaining preferential tax status Qualifying Income and Activities
By adhering to these conditions and understanding the benefits, Free Zone Persons can effectively navigate the UAE Corporate Tax landscape and potentially enjoy significant tax advantages.
Failure to meet any of these criteria during a tax period results in the loss of QFZP status and the entity is then subject to the standard corporate tax rate of 9% of its taxable income. purposes
The UAE Corporate Tax Law familiarises a General Interest Deduction Limitation Rule under Article 30. This rule purposes to limit the amount of interest that can be deducted for tax
Specific Interest Deduction Limitation Rule
There are further provisions contained in Article 31 of the UAE Corporate Tax Law in regard to interest expense on related parties loan.
Threshold for Applicability
The General Interest Deduction Limitation Rule might not be applicable when the Net Interest Expenditure of the taxable person during a particular tax period is below a specified limit as may be stipulated by the Minister.
Group Considerations
Upon relevant taxable persons who are linked to one or more persons by ownership or control and should consolidate financial statements, the Ministers can provide a determination that denotes the provisions of Net Interest Expenditure deduction.
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At Alpha Equity, we offer bespoke corporate tax consultancy services in Dubai to enable structuring advantages than utilise DTAAs, Free Zone incentives, and group reliefs. Our Corporate Tax Planning in Dubai integrates your corporate finance strategy with long term business objectives.
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Alpha Equity’s Corporate Tax Consultancy Services in Dubai include:
Corporate Tax Registration & Consultation: Our corporate tax service in Dubai includes complete support in terms of registration and tax returns filing without violation of the standards.
Tax Advisory & Structuring: The tax advice we provide to corporate clients through corporate tax consultants in Dubai is strategic corporate tax planning such as restructuring of groups and cross border tax planning.
VAT Solutions: Our services include full corporate tax consultancy services in Dubai including VAT registration, invoicing and VAT refund procedures.
Transfer Pricing Services: Our professionals do high-quality transfer pricing documents which are based on local laws and OECD requirements which are compliant.
Dispute Resolution & Representation: We provide professional representation on the FTA audits, penalty appeals and a written submission, supported by our experience at tax compliance in Dubai.
M&A Tax Support: The corporate tax consultancy services in Dubai regulates in-depth due diligence and structuring in regards to tax considerations during mergers and acquisitions.
Free Zone Entity Services: We help you go through the requirements of being eligible to zero-rate tax and process annual returns, which are headed by corporate tax experts based in the UAE.
With years of experience in the field of tax consultancy, we offer excellent services in tax consultancy services in Dubai at Alpha Equity with tailored services according to your business requirement. Our corporate tax consultants in Dubai will keep your company in line with both local and international tax laws as we help you to fine tune your tax plans that are highly effective. Our assistance is long-term, and it involves corporate tax registration in Dubai and VAT services as well as transfer pricing and M&A tax strategy. At Alpha Equity we can help you meet your taxation strategies in order to help you pay less taxes and evade sanctions and implications.
Corporate tax services in Dubai provide businesses with comprehensive solutions for tax registration, compliance, planning, and reporting. These services ensure that companies meet UAE tax laws while minimizing tax liabilities and avoiding penalties.
Corporate tax consultants in Dubai help businesses navigate the complexities of UAE tax regulations. They provide strategic advice, ensure compliance, and offer tailored solutions to optimize tax planning, improving your company’s financial efficiency.
Corporate tax consultancy services in Dubai include corporate tax registration, tax advisory, VAT solutions, transfer pricing services, M&A tax support, and dispute resolution, all aimed at ensuring compliance and optimizing tax strategies for businesses.
Corporate tax services in Dubai ensure your business is fully compliant with local tax laws, including VAT and corporate tax regulations. These services also help reduce your tax burden through strategic planning and efficient tax management.
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Yes, corporate tax consultancy services in Dubai assist with VAT registration, ensuring your business complies with the UAE’s VAT laws. Consultants will guide you through the registration process, invoicing compliance, and VAT refund procedures.
Corporate tax services in Dubai help businesses stay compliant with UAE tax regulations by preparing accurate tax filings, ensuring timely payments, and providing strategic advice on tax-related matters. These services minimize the risk of penalties and legal issues.
Corporate tax consultants in Dubai play a critical role in mergers and acquisitions by providing tax-efficient structuring advice, conducting due diligence, and ensuring that transactions comply with UAE tax laws, helping businesses minimize tax liabilities during M&A processes.
Corporate tax consultancy services in Dubai offer comprehensive transfer pricing services, ensuring that your business complies with local regulations and OECD guidelines. Consultants help prepare robust documentation to support intercompany pricing and avoid disputes with tax authorities.
To get started with corporate tax services in Dubai, contact Alpha Equity for a free consultation. Our corporate tax consultants in Dubai will assess your business needs, provide a tailored tax strategy, and guide you through the entire tax registration and compliance process.