Corporate Tax
When did corporate tax in the UAE start? The UAE government has indicated that it will introduce a corporate tax regime in 2022, but it is not yet certain when the tax will be implemented. This decision will depend on the country’s political and economic conditions. However, there are a few things that companies should be aware of before the corporate tax regime starts.
The introduction of a CT regime has a number of benefits, including increasing government revenue by diversifying revenue streams. The UAE is currently dependent on revenue from the hydrocarbon industry. In addition, the UAE government offers leniency to businesses. This includes reducing penalties for non-compliance and extending the timeframes for penalty payment.
The UAE has also taken measures to improve tax transparency, and brought domestic tax rules in line with international standards. The changes were driven by the OECD’s Base Erosion and Profit Shifting (BEPS) project, which aims to tackle international tax avoidance and fill gaps in existing tax rules. BEPS aims to eliminate the practice of multinational companies artificially shifting profits to lower-tax jurisdictions. The BEPS Action Plan was developed by the OECD in partnership with G20 nations.
When Did Corporate Tax in the UAE Start?
While the CIT regime was announced in January, it was not introduced until June 2023. The first full financial year after this date will be subject to the tax, which will include the income earned in the 2024 calendar year. To be CIT-liable, businesses must register with the Federal Tax Authority and obtain a tax registration number. The registration process will be automatic. Companies must file tax returns within nine months of the end of the tax period, and must submit supporting schedules and payments.
Despite its absence of a federal corporate tax, the UAE has individual emirates that impose corporate taxes on certain enterprises. Some of these enterprises are subject to up to five percent of their revenue, while some other industries enjoy exemptions from corporate taxes. One of these sectors is oil and gas production. Moreover, the UAE is home to several free zones. These zones offer companies a number of benefits, such as tax holidays and exemptions from capital gains.
what is the coroporate tax in the UAE
The UAE government has also announced that the new corporate tax regime will be introduced for financial years that begin on or after 1 June 2023. Its standard rate of 9% will be among the lowest in the region. Companies that are subject to corporate tax will most likely begin reporting in 2024 and will be liable to pay their first corporate income tax return by the end of that year.
The UAE CIT regime is expected to introduce transfer pricing rules in the future, requiring that all transactions are conducted at arm’s length. This ensures that the pricing of transactions is not influenced by any connection between the companies.