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Corporate Tax Challenges and Opportunities to Foreign businesses in the UAE

Business owners in the UAE can avail unique opportunities from the UAE corporate tax regime. For any tax complexities that might be faced upon registering and filing corporate tax and to stay compliant with tax regulations, it is advisable for taxable persons to seek the expert services of top tax consultants in UAE

Scope of the UAE Corporate Tax 

The UAE Corporate Tax is a form of direct tax levied on the net income of corporations and other businesses subject to other exemptions mentioned in the corporate tax statute. Broadly, Corporate Tax applies to the following “Taxable Persons”:

  1. Resident Person
  2. Non-resident persons

The corporate tax rate is as follows:

  • A margin of 0% for taxable income up to AED 375,000. 
  • A percentage of 9% for taxable income above AED 375,000.

However, it is important to note that the Corporate Tax Law exempts certain activities and persons such as banking, investment funds, and companies in the oil and gas industry, who continue to be exempt from corporate tax UAE.

Foreign Businesses in UAE Challenges

Operating a business in the United Arab Emirates (UAE) can be a complex task for foreign companies unfamiliar with corporate tax regulations. Failure to comply with the prevailing laws can result in severe financial penalties.

The UAE Corporate Tax Law requires all businesses, including foreign businesses operating in the UAE, to register for Corporate Tax. Corporate tax is assessed on a company's net profits, based on its accounting year-end figures. It is important to note that Corporate Tax in UAE applies not only to limited liability companies but also to all non-resident entities engaging in business activities within the country’s borders. Therefore, it is imperative for all taxable persons to outsource the services of accredited tax consultants in UAE to seamlessly establish their taxability and stay compliant.  

Opportunities Businesses Can Benefit From the UAE Corporate Tax Regime

Despite the intricacies associated with implying and complying with Corporate Tax UAE, there are a number of opportunities that businesses can benefit from the Corporate Tax Regime. Corporate tax advisory services provide guidance to companies as they navigate the Corporate Tax landscape and develop strategies that maximize their returns to shareholders.  

Read More: What is the Concept of Tax Period as Per UAE Corporate Tax?

Foreign Businesses in UAE Opportunities

The United Arab Emirates (UAE) provides a plethora of opportunities for foreign businesses to invest and expand their operations. Corporate tax advisory services for business tax filing and corporate tax registration in UAE have to be enforced. One of the benefits for foreign companies investing in the UAE is access to a large consumer base and the country’s proximity to other Middle Eastern countries. The UAE is also well known for its tax-friendly environment, making it an attractive choice for businesses looking to make investments in the region.

However, foreign companies should be aware of some potential challenges they may face. Corporate tax rates vary depending on the type of business and its activities, and foreign companies may be subject to different rules than those applicable to domestic businesses operating in the country.

It is also important for foreign companies to understand the UAE’s corporate tax filing requirements. Corporate income tax will be due within six months of the end of the fiscal year, and businesses must submit a detailed financial report along with their Corporate Income Tax Return. Corporate tax registration in UAE is also required for foreign businesses operating in the country, and failure to register can result in hefty fines.

Seek Consultation From UAE Tax Consultants

For UAE foreign businesses to stay compliant to the UAE corporate statute and to avoid incurring fines for noncompliance, it is essential to seek expert consultation from UAE tax consultants. Thus, contact us today and we shall be happy to assist you. 

Mohammad Alkhatim

Mohammad is a qualified Legal Consultant with over 5 years of experience gained in diverse intricate tax matters, he has high expertise in conducting tax negotiations and investigations with the Federal Tax Authority and other external Tax Bodies. He has vast experience in reviewing and drafting tax documents. Mohammad has also advised on a plethora of tax matters, he draws much attention to tax filing procedures and to offering professional investigations to underlying tax complexities.

Read More: Guide to Corporate Tax Registration & UAE Corporate Tax Filing

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.