Corporate Tax Definition :

Corporate Tax is a form of direct tax levied on the net income or profit of corporations and other businesses. It is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions.

CT Rates :

For Example,

• Taxable income of AED 0 – AED 375,000 at 0% = AED 0.
• If a business has earned taxable income of AED 400,000, then  AED 400,000 – AED 375,000 = AED 25,000 at 9% = AED 2,250.

CT For Individual :

• Business income earned under a commercial license will be within the scope of UAE CT.
• The investment in real estate by individuals in their personal capacity should not be subject to UAE CT .
• Individuals will not be subject to UAE CT on dividends, capital gains and other income earned from owning shares or other securities in their personal capacity.
• Interest and other income earned by an individual from bank deposits or saving schemes will not be subject to UAE CT.

CT For “Large” Multinationals :

• A multinational corporation that operates in its home country, as well as in other countries through a foreign subsidiary or branch. Merely earning income from outside its home country.
• In the context of the global minimum effective tax rate as proposed under ‘Pillar Two‘ of the OECD Base Erosion and Profit Shifting project,” large” refers to a multinational corporation that has consolidated global revenues in excess of EUR 750m (c. AED 3.15 bn)

CT For Foreigners :

• Foreign entities and individuals will be subject to UAE CT only if they conduct a trade or business in the UAE in an ongoing or regular manner.
• UAE CT will generally not be levied on a foreign investor’s income from dividends, capital gains, interest, royalties and other investment returns.

CT For Freezones :

• Free zone businesses will be subject to UAE CT, but the UAE CT regime will continue to honour the CT incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE.
• The UAE CT treatment that will apply to businesses in free zones will be the same across all free zones.

CT For Industry Sectors :

• Businesses engaged in the extraction of natural resources will remain subject to Emirate level corporate taxation and be outside the scope of the UAE CT.
• Banking operations and businesses engaged in real estate management, construction, development, agency and brokerage activities will be subject to UAE CT.

CT For Group of Companies :

• A UAE group of companies can elect to form a tax group and be treated as a single taxable person, provided certain conditions are met.  They are required to file a single tax return for the entire group.

CT For Losses:

• The UAE CT regime will allow a business to use losses incurred to offset taxable income in subsequent financial periods. Excess tax losses may be carried forward and used against taxable income in future years.
• Tax losses from one group company may be used to offset taxable income of another group company, provided certain conditions are met.

CT For Administration:

• Only one CT return will need to be filed per financial period. No provisional or advance CT filings will be required.
• Similar to other taxes in the UAE (e.g. VAT), businesses will be subject to penalties for non-compliance with the CT regime.

Further information on the UAE CT compliance obligations and applicable penalties will be released in due course.

FOR MORE INFORMATION, CONTACT US :

Phone : +971 52 1952 532 / +971 4 240 1110

Mail-Id : info@yugaaccounting.com

Website : www.yugaaccounting.com