Corporate Tax Registration

• Who Needs to Register: Every taxable person (legal entity or natural person) deriving income from a business activity carried out within the UAE must register for corporate tax.

• Registration Threshold: There's a zero-tax threshold for taxable income up to AED 375,000 (approximately USD 102,100). Businesses with projected or actual taxable income exceeding this threshold must register for corporate tax.

Tax Assessment

• Self-Assessment: The UAE uses a self-assessment system. Businesses are responsible for calculating their taxable income, applying the tax rate, and determining their tax liability.

• Estimated Tax Payments: Businesses with taxable income exceeding certain threshold are required to make quarterly installments of estimated tax throughout the year.

Filing of Tax Returns:

• Deadlines: Corporate tax returns must be filed electronically with the FTA within the timeframe specified by the Authority. This is typically within 12 months of the company's financial year-end.

• Required Information: The tax return will require details like taxable income, tax calculations, any claimed deductions, and financial statements.

• Penalties for Late Filing: Failure to file tax returns or late submissions can result in penalties as per the UAE tax laws.

Additional Points:

• Transfer Pricing: For businesses with related-party transactions, transfer pricing regulations may apply to ensure transactions are conducted at arm's length.

• Group Taxation: The UAE offers group taxation options for eligible companies under certain conditions.

• Free Zones: Certain free zones in the UAE may have different corporate tax regulations. It's advisable to consult with the relevant free zone authority for details.

Important Resources:

• Ministry of Finance - UAE: https://mof.gov.ae/corporate-tax/ provides official information on corporate tax in the UAE.

• Federal Tax Authority (UAE): https://tax.gov.ae/en/ offers guidance on tax registration, filing procedures, and other tax-related matters.

Tax Computation:

• Tax Base: The starting point for calculating corporate tax is the taxable income shown in the company's audited financial statements prepared following IFRS

• Tax Rate: A standard corporate tax rate of 9% applies to taxable income exceeding AED 375,000.

• Deductions: Various allowable deductions can be applied to reduce taxable income, such as:

  • Business expenses (e.g., rent, salaries, utilities)

  • Interest on loans

  • Depreciation on assets

  • Bad debts