tax-advisory-services

All About Taxes In UAE

All About VAT, TRC, CT

Tax Residence Certificate (TRC) is a document issued by the UAE Federal Tax Authority stating the applicant as a resident of for eligible government entities, companies and individuals to take advantage of agreements to avoid double taxation on income signed by the UAE.

We provide professional guidance about

Vat  (Value Added Taxes) Services

Corporate Tax (CT) Services

UAE is introducing Corporate Tax (CT) with effect from 1st June 2023. Following are the key highlights.

Topic Expected provisions
Effective date of Corporate Tax(CT) Financial year starting on or after June 1, 2023
Applicability Applicable  to all commercial, Industrial  & professional activities, in all the Emirates of UAE
Administration, collection and enforcement of CT Federal Tax Authority (FTA)
Who will be subject to CT?                            Apply to all UAE businesses and commercial activities (except extraction of natural recourses)
What is business activity? >For business entities: All activities undertaken by legal entity.

>For individuals: Individual having or being required to obtain a license to carry out the activities
Net income/business profit subject to CT Accounting net profit of a business after making adjustment for certain items as per CT laws
Rate of CT >0%: For taxable annual income upto AED 375,000

>9%: For taxable annual income above AED 375,000
Taxation for individuals > Salary and other employment income not taxable

>Investment income in real estate in their personal capacity not taxable (In case not required to obtain a license)

>Bank deposit income not taxable

>Dividend, capital gains and other income earned from owning shares in personal capacity is not taxable

>Income earned by free lance professional: Taxable if the annual income exceeds AED 375,000
Incomes exempt from CT >Dividends and capital gains earned by UAE business from qualifying shareholding(ownership interest in UAE or  foreign company.)

>Qualifying intra-group transactions, subject to necessary conditions are met.
Taxability of foreign company or individuals Subject to CT only if conducts a trade or business in UAE in an ongoing or regular manner.
Taxability of foreign investor >No CT for income from dividends

>No CT for capital gain

>No CT for interest

>No CT for royalties

>No CT for other investment returns
Taxability of Free Zone Free zones will be subject to CT, however UAE CT regime will continue to honour CT incentives offered to free zone businesses which comply with regulatory requirements, and which do not conduct business in mainland of UAE.
Requirements for register and file CT return Required to register and file CT return
Applicability of CT in different free zones Applicability of CT is same across all free zones
Exempted sector >Oil and gas sector: Will remain subject to current Emirates level CT and outside the purview of CT.
Applicability of banking sectors >Banking operations will be subject to CT

>Foreign banks:  further details of change if any in current Emirates level CT is awaiting
Real estate Businesses engaged in real estate management, construction, development, agency and brokerage services will be subject to CT
Prior year losses UAE CT regime will allow business to use losses incurred to offset taxable income in subsequent financial periods.
Carried forward of Excess CT losses Excess tax losses may be carried forward and used against taxable income in future years, subject to certain conditions.
Group company losses Tax losses from one group company may be used to offset the taxable income of another group company, subject to certain conditions.
Forming of tax group A UAE group of companies can select to form a tax group, provided certain conditions are met.

Required to file single tax return.
Applicability of UAE with holding tax UAE withholding tax( tax collected at source by the payer) will not be applicable on domestic and cross border payments of any nature under UAE CT regime.
Requirements for registration Required to register for UAE CT
Frequency of CT return One CT per financial period
Mode of filing Electronically
Requirements of advance payment of CT Not required
Consequence of non-compliance Similar to VAT rules.

 

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