The corporate taxation public consultation document has been released by the Ministry of Finance. This document will have details that will show us what direction the Corporate Tax regulations are headed. This can be used to prepare ourselves for the upcoming Corporate Tax Regulations. After VAT this is the next tax that is being implemented in the UAE. This is a direct taxation system that will tax the taxable income directly.
9% Corporate Tax is an added compliance requirement in the UAE and will change the way business is done here. Businesses must update their systems and processes to accommodate this new regulation. Although the law is not published yet, we can use the public consultation document to get an idea of where the regulation is headed.
What is the Public Consultation Document?
This document includes the “proposed” corporate tax regime in the UAE. The ministry of finance allows the public to give their input on the regulations to make sure the regulation is better understood. You can give your input on this link before the 19th of May 2022.
It is important to understand that these are not the final regulations. This will only give us an idea of where the regulation is headed.
What are the key principles of the Corporate Tax Regime in the UAE?
The objective of the ministry of finance is to implement globally accepted business practices and international standards. All this is to be done while still supporting the business growth in the UAE. From the consultation document, we can see that some of the key principles are –
- Flexibility and alignment with modern business practice. The tax system should be such that it will easily be able to adapt and update the new business practices as and when changes arise
- Certainty and simplicity. You will see this is clear in the consultation document. Simplicity reduces the compliance burden on business in the UAE.
- Neutrality and equity. To level the business playing field, it is best to make sure that all businesses in the different industries are treated equally.
- Transparency. The corporate tax regime aims to provide clear guidance and public communication which is important to ensure businesses understand their obligations and entitlements.
We will be sharing detailed information on each section of the consultation documents which includes but is not limited to, Free zone treatment, how taxable income is calculated, tax groups, and administration of corporate tax. Stay tuned for these detailed updates on the insights section of our website.
For professional advice on corporate tax, book an appointment with our tax experts.