Introduction to the Federal corporate tax UAE

United Arab Emirates has recently announced Leavy or Corporate Tax on the net benefit of companies. The final law has not yet been issued by the Federal Tax Authority (TLC). Meanwhile, the FTA has begun to share periodic information about the Corporate Income Tax (“CIT”) to raise awareness and seek public consultations.

Through this article, we share the most prominent aspects of the importation of knowledge shared by the FTA on the subject. Users can seek more information reading detailed information shared by the FTA. We also welcome readers to connect withus to get more knowledge on the subject.

What is the Eau Federal Corporate Tax?

The corporate tax is a direct form or tax collected on the net gain of corporations and other businesses. In many other jurisdictions it is also known as “Corporate Income Tax”.

EAU CIT will apply to all EAU companies and commercial activities equally. However, there is an exception for the extraction of natural resources, which will remain subject to corporate taxes at the Emirate level.

Validity date for corporations tax

The EAU regime of the Federal Corporate Tax of the EAU will enter into force for the financial year as of June 1, 2023 or later.

Examples:

A business that has a financial year as of July 1, 2023 and that ends on June 30, 2024 will be subject to the EAU CIT as of July 1, 2023 (which is the beginning of the first financial year that begins as of June 1, 2023).

A business that has a financial year (calendar year) as of January 1, 2023 and that ends on December 31, 2023 will be subject to the EAU CIT as of January 1, 2024 (which is the beginning of the first financial year that begins from June 1, 2023).

Applicability of the new Tax in the EAU

The Eau Cit regime will be implemented without a parallel tax to the income of natural persons, namely individuals.

To level the field of play between the built -in companies and the noted companies owned by individuals, the EAU CIT also apply to natural persons who participate in a commercial or commercial activity in the EAU. This will include exclusive establishments or individual properties and partners in an unbalanced association that carries out businesses in the EAU.

Income from labor income and other personal income obtained by EAU and foreign persons, such as dividends, rental receipts of real estate investments of the EAU and other income from investments, are not within the scope of the regime of proposed by EAU CIT.

Federal corporate tax rate in the EAU

The taxable income will be the net accounting gain of a company, after making adjustments for certain articles to be specific under the law of the EAU CIT.

The net accounting benefit of a company is the amount informed in the financial statements prepared in accordance with the acceptable international accounting standards.

Federal Corporate Taxes rates

CIT rates in general are:

• Taxable income up to AED 375,000 – 0% cit;
• Taxable income above AED 375,000 – 9% cit

Compliance requirements

Accounting Archives

• It will be required that a company keep financial records and others that explain the information contained within the return of CIT and other documents sent to the FTA.
• Prepare the audited financial statements as determined by the laws and regulations of the applied company.

Registration and defective

• A business subject to CIT must be registered in the FTA and obtain a tax registration number within a prescribed period.
• When a company ceases to be subject to the CIT, it must apply to the FTA to be an atregator for CIT purposes within a prescribed term. EG: Due to the cessation or settlement of the business.

Tax and payments statements

• Prepare and present the tax declaration and support schedules related to the FTA for each annual fiscal period within the prescribed period.
• Make the payments within a period prescribed by the FTA to resolve the taxpayer’s CIT responsibility for that tax period

To obtain information about the EAU federal corporate taxes, you can communicate with us in info@accountantsbox.com Or contact us Gentleman