How does corporation tax (CT) work?

A type of direct tax known as corporate tax is imposed on the net profit or income that corporations and other legal organizations make.

The CT’s goals are:

The UAE plans to accomplish this by launching the CT:

• strengthen its standing as a major hub for global investment and trade.
• quicken its expansion and change in order to fulfill its strategic goals.
• Reaffirm its dedication to abstaining from unfair tax tactics and conforming with international tax transparency regulations.

CT is applicable to:

Every person and business operating in the United Arab Emirates with a commercial license

1. Enterprises in free zones (The corporate tax benefits currently offered to free zone businesses that adhere to all legal requirements and do not conduct business on the nation’s mainland will still be recognized by the UAE Corporate Tax)
2. Only ongoing, regular business may be conducted in the UAE by foreign entities and individuals.
3. Financial dealings
4. Development, construction, agency, brokerage, and real estate management companies.

Exceptions to the CT

The guidelines for company tax exemptions are as follows:

1. Natural resource extraction companies are not eligible for the Connecticut Transfer since they are still subject to the current Emirate corporate tax.
2. Dividends and capital gains that a UAE corporation receives from qualified shareholdings are not subject to CT.
3. As long as the conditions are satisfied, qualifying intra-group transactions and reorganizations are exempt from CT.

Additionally, the CT will not be relevant for:

• The pay and other benefits received from a job, whether it be in the public or private sector.
• Interest and additional income from savings or bank account operators.
• Dividends, capital gains, interest, royalties, and other investment returns received by a foreign investor
• People who invest in real estate for themselves
• Dividends, capital gains, and other earnings received by persons who own shares or other securities.

CT Rate:

The following are the Corporate Tax in UAE rates as stated by the Ministry of Finance:

• There is no tax on income up to AED 375,000.
• 9% of the entire amount taxable that exceeds AED 375,000;
• A distinct tax rate (to be specified) for sizable multinational enterprises that satisfy the conditions outlined in ‘Pillar two’ of the OECD Base Erosion and Profit Shifting Project.

The CT shall be administered, collected, and enforced by the Federal Tax Authority (FTA).

CT Prerequisites:

1. 1. If you have previously registered with the Federal Tax Authority, present your FTA credentials.
   2. A recent copy of the business license
   3. A copy of the currently valid passports of the owner or partners
   4. A copy of the current Emirates ID belonging to the owner or partners
   5. You must have a Memorandum of Association (MOA) or Power of Attorney (POA).
   6. The individual in question’s contact details, including their phone number and email address
   7. Contact details for businesses, such as a full address and a P.O.
   8. The corporate tax seasons.