Calculation of Taxable Income | 9% UAE corporation tax | UAE Public Consultation Document
From the consultation document released by the MOF, we have been given a basic understanding of the calculation of the taxable income. We need to keep in mind that this is yet to be finalized however from this we can use the current information we have to be prepared for when the law is implemented
Corporation tax is a new concept in the UAE, we need to be well prepared to calculate the taxable income. This will give us enough time to optimize the tax liability.
Which Freezones are Designated Zones in the UAE?
We have discussed earlier the different options to have a licensed company, mainland, freezone, offshore. Now what is this designated Zone? How does it differ from the others? Here we will also get into the list of designated zones.
Being a company in UAE, it is important to follow the local laws, which include the tax laws. If the special tax laws are not followed within a designated zone properly then it will attract penalties. This will impact the company’s performance.
Residents & Non-Residents Corporate Tax | UAE Public Consultation Document
The corporate tax public consultation document provides details on the basis of the taxation. 9% corporation taxation is something we expect to come into effect mid of 2023. We will discuss resident and non-resident persons, we will also understand concepts relating to the permanent establishment and what UAE sourced income is.
It is important to understand what the basis of taxation is for both resident and non-resident persons in the UAE. It is only after understanding this concept can the calculation of taxable income be understood.
Free zone Corporate Tax | UAE Public Consultation Document
Corporate tax impact on Freezone companies will need a lot of discussions. There are many Free zone entities in the UAE as stand-alone companies and as part of group companies. It is very relevant to how their transactions impact their tax liability.
Freezones jurisdictions have always advertised that companies in the Freezones will not be taxed. It is important to now understand what are the specific regulatory requirements the corporate tax regime has in place for Freezone companies, to ensure proper compliance.
Taxable Persons under Corporate Taxation | UAE Public Consultation Document
The Public consultation document discusses who are the proposed taxable persons for the new 9% Corporate Taxation in the UAE.
Understand who is a taxable person and who is exempt from taxation is essential to understand if you need to meet the compliance requirements for corporate taxation and pay 9% on the taxable income.
9% Corporate Tax in UAE – Our Thoughts
UAE has just announced that a corporate tax of 9% will be implemented from 1st June 2023. Implementation of corporate taxation in the UAE is something we had mentioned in the past as well. Now we have some more information that we can discuss further about the corporate tax in UAE and our thoughts about the same.
This is the first time a direct tax is being introduced for businesses in the UAE. This means that it will directly impact the profitability of the company. It is important to stay updated to make sure the business is ready.