If you are a UAE citizen you may have heard about the Corporate Tax in Dubai. The Ministry of Finance implemented this tax, in UAE in January 2022. As per the ministry, the corporate tax will be effective from 1st June 2023. Depending on the financial year it will be applicable on or after June. The main aim of UAE by fixing this corporate tax is to fix their position in the global market as the leading investment and business hub, in order to develop the country.
What is Corporate Tax?
Corporate tax is a form of direct tax that is levied on income. The Federal Tax Authority is responsible for the administration, collection, and enforcement of UAE Corporate Tax. The Ministry of Finance will remain the main authority for bilateral or multilateral agreements. By implementing corporate tax the countries can sustain their economy. The Corporate Tax in Dubai will enhance corporate governance and strengthen the economy of the nation. This is for the economic transformation of the nation. To know more about corporate tax get in touch with Right Way, VAT Registration Service in UAE.
For whom corporate tax is applied
- For all those business people doing businesses under a commercial license in the UAE.
- Those who start their business in the free zone area.
- Foreign entities and individuals conducting ongoing or regular business or trade in the UAE.
- For all banking operations.
- Companies engaged in mining, exploration, and exploitation of natural resources will be exempt from corporate tax as their taxation will remain at the Emirate level.
What is the corporate tax rate?
According to the Ministry of Finance UAE, the corporate tax rates are implemented as 0% taxable income up to AED 375,000 and 9% taxable income above AED 375,000. There is an additional tax rate for all the multinationals that meet the criteria of OECD’S Base Erosion and Profit Shifting Project. A group of companies can be elected to form a tax group and treated as a single taxable person, but they should meet certain conditions.
Corporate taxes are filed per financial period that is one year. The corporate tax return needs to be filed electronically and will not require any advance corporate tax payments. The full guidelines for the corporate tax have not yet been released, the government will release them at a later stage. If you want to know more about Corporate tax the Right Way, Accounting in Dubai is there to help you.
Points to consider before filing tax
- The firm must note that all the information provided is correct and relevant before filing the tax for documentation purposes.
- They must be well-versed in implementing tax legislation and court rulings on the subject.
- Business objectives should be considered in tax planning, as well as future incorporations and changes within the firm that will have tax implications in the future.
- The firm should conduct proper tax planning before filing its taxes since poor planning will likely result in paying more than the actual taxable amount.
Right Way, Corporate Tax in Dubai provides excellent client service. We have experts who can provide excellent service by knowing your requirements. We help our clients with all their financial concerns. Contact Right Way to know more about tax and requirements.