In today’s scenario of globalization and technology convergence, the process of doing business has been redefined. Outsourcing various processes makes a lot of business sense. Most businesses and large companies are outsourcing their accounting processes for better management of their finances, and time etc.
These services are structured to suit an individual client’s needs and requirements. This service involves preparing and maintaining day to day bookkeeping and monthly or quarterly management accounts. These books are prepared as per the International accounting standards and can also be made as per specific client instructions.
Corporate Tax In The UAE
The Ministry of Finance has announced the introduction of a 9% federal corporate tax in the UAE on business profits with a threshold of AED 375,000. This update will become effective from the financial year beginning 1st June 2023.
The corporate tax will be payable on the profits of UAE businesses as reported in their financial statements prepared in accordance with internationally accepted accounting standards. There will be minimal exceptions and adjustments. This clearly means that financial statements must now be audited on time, without exception.
We shall keep a close watch on the details which are yet to be released. For now, it has been made clear that the UAE corporate tax regime shall follow best global practices and most likely to be implemented with ease in compliance requirements.
The extraction of natural resources, likely to remain subject to emirate-level corporate taxation, is to be the only business activity with tax exception, the announcement says. Exemptions, subject to some conditions, will also apply to entities operating in Free Zones.
01. What is Corporate Tax?
Corporate Tax is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions.
02. Why is the UAE introducing CT?
Introducing a CT regime reaffirms the UAE’s commitment to meeting international standards for tax transparency and preventing harmful tax practices
03. Is the UAE the first country to introduce CT?
04. When will the UAE CT regime become effective?
A business that has a financial year starting on 1 July 2023 and ending on 30 June 2024 will become subject to UAE CT from 1 July 2023 (which is the beginning of the first financial year that starts on or after 1 June 2023)
A business that has a (calendar year) financial year starting on 1 January 2023 and ending on 31 December 2023 will become subject to UAE CT from 1 January 2024 (which is the beginning of the first financial year that starts on or after 1 June 2023)
05. Will UAE CT be applicable to businesses in each Emirate?
06. What will be the role of the Federal Tax Authority?
07. What will be the role of the Ministry of Finance?
The information in this page is meant to provide an initial introduction to the proposed UAE Corporate Tax (CT) regime in advance of relevant legislation being finalised and promulgated. It is not intended to comprehensively address all possible aspects of the UAE CT regime or to provide definitive answers, and should not be used for individual or business decisions as it does not represent the final legislation. This document is subject to change without notice.
Further information on the technical details and other specifics of the UAE CT regime will be made available in due course.