The education sector in the UAE will experience significant changes under VAT, as certain goods and services provided by educational institutions will now be subject to 5% VAT. Educational institutions may have concerns about how VAT impacts their operations. To address these concerns, let’s explore…

In our previous article, ‘Steps to Submit e-Guarantee in FTA Portal’, we discussed how to submit an e-guarantee in the FTA portal. Once the e-guarantee is submitted and approved, goods can be cleared through Customs. E-guarantees are required in certain import scenarios by non-registrants, such…

Education is a crucial sector in the UAE, and with the introduction of VAT, it has also been affected by the additional tax on certain goods and services provided by educational institutions. Here’s a quick guide to the VAT rates applicable to the education sector: 0%…

As a consumer in the UAE, you are aware that VAT has been introduced, and you have paid VAT on many purchases since its implementation. However, there have been instances where suppliers have wrongfully charged VAT, even though they are not authorized to do so.…

The UAE has long been known for its business-friendly environment, particularly its free zones, which offer companies attractive benefits such as tax exemptions, full foreign ownership, and simplified regulatory frameworks. Historically, these benefits have made the UAE free zones a hotspot for foreign investment and…

Overview of UAE’s New Corporate Tax Regime and Small Business Relief. Effective from 1 June 2023, the UAE introduced a new corporate tax regime, requiring taxpayers to pay corporate tax on their earnings. To support small businesses, the UAE government has launched a program called…

The reverse charge mechanism (RCM) in the UAE is a pivotal component of the VAT system, particularly affecting transactions involving electronic devices. Under the RCM, the responsibility for paying VAT shifts from the supplier to the recipient of the goods or services. This mechanism is…

Article 60 of the UAE Corporate Tax Law outlines the procedures for assessing corporate tax and imposing penalties. As new decrees and regulations are issued by the Federal Tax Authority (FTA), it is crucial for businesses to stay informed about any updates or changes. Corporate Tax Assessment…

UAE Corporate Tax Deductions: Key Points to Know A taxable person can receive deductions on their income during a tax period, provided they meet the requirements outlined in the corporate tax law by the Authority. Deductions are amounts subtracted from taxable income during tax liability calculation,…

What are the key registration deadlines for different types of entities under the recent UAE corporate tax update? The Federal Tax Authority (FTA) of the United Arab Emirates has issued a new directive outlining specific registration timelines for entities liable for Corporate Tax. Starting from…

What are the essential steps and considerations businesses should undertake to prepare effectively for UAE corporate tax filing? For businesses, tax filing is a formidable task filled with numbers and calculations. Many businesses approach tax filing with utmost care and focus, as it can be…

Corporate tax, also known as corporate income tax or business profits tax, is a direct tax that businesses must pay on their net income or profit. This includes businesses operated by natural persons. In this article, we will explore who qualifies as a natural person…

When Must Businesses Register for VAT?Mandatory Registration:UAE-based businesses must register if their taxable supplies and imports exceed AED 375,000 annually.Non-UAE-based businesses must register if they make taxable supplies in the UAE, regardless of the value, and no other entity is responsible for paying the tax.Voluntary…

 Registration Requirements for Value Added Tax (VAT) Types of RegistrationAny business that surpasses the mandatory or voluntary registration thresholds may need to or have the option to register for VAT. Mandatory Registration A business is obligated to register if:1. The total value of its taxable…

To assist you in successfully completing the formalities for VAT registration, we have provided a step-by-step process for applying for VAT registration. VAT Registration in UAE The process of applying for VAT registration consists of two steps. First, you need to create an e-Services account,…

Key Highlights of Corporate Assess in UAE

A general anti-abuse rule is used to prevent the use of ‘abusive’ transactions or arrangements, which may be legal within the parameters of the Law, but are not in- line with the Law’s intended spirit and purpose.413 The rule allows the FTA to counteract or…

Taxable Persons are required to maintain records and documentation that: • support the information provided in a Tax Return or in any other document to be submitted to the FTA;407 and 402 Article 53(7) of the Corporate Tax Law. 403 Article 53(3) of the Corporate…

Certainty is an important hallmark of an efficient tax regime, and it is considered international best practice to create a stable tax environment in which Persons can be certain about their Corporate Tax treatment. Tax clarifications provide an opportunity for Persons to obtain certainty on…

Consistent with Corporate Tax being a self-assessed regime, Taxable Persons should pay Corporate Tax and file their Corporate Tax Return within 9 months from the end of the relevant Tax Period.400 For example, a Taxable Person with a Financial Year ending on 31 December is…

In order to apply some of the provisions in the Corporate Tax Law, Taxable Persons will need to make the relevant elections or applications. Elections can be applied unilaterally by Taxable Persons, and do not require an approval from the FTA to give effect to…

Financial Statements record the financial activities and performance of a Business, and are a key element of Corporate Tax Law. A Taxable Person’s Accounting Income (profit or loss) as stated in the Financial Statements is used as the starting point for calculating Taxable Income. Taxable…

All Taxable Persons should register for Corporate Tax with the FTA and obtain a Tax Registration Number for Corporate Tax.361 This needs to be done before a deadline to be determined by the FTA. All Taxable Persons are encouraged to register for Corporate Tax as…

In some cases, Taxable Persons may be entitled to credits which they can use to offset against their Corporate Tax liability. These credits arise if they have paid tax on the same income already, either in the UAE or in a foreign country. Requirements for…

The amount of Corporate Tax due in a Tax Period is calculated by applying the appropriate Corporate Tax rate to the Taxable Person’s Taxable Income (see Chapter 6). General tax rates Corporate Tax applies to Taxable Income at the following rates Taxable Income not exceeding…

Companies under common ownership can form a Tax Group, subject to meeting the relevant conditions.317 This allows the Tax Group to be treated as a single Taxable Person, reducing the compliance burden on individual companies by consolidating accounts and eliminating intra-group transactions, and increasing flexibility…

As noted above, partners in an Unincorporated Partnership can make an application to be taxed at the partnership level, with the partnership itself becoming a Taxable Person.310 This application will apply from the commencement of the Tax Period in which the application is made or…

Where an Unincorporated Partnership has not made an application to be treated as a standalone Taxable Person: • A partner’s distributive share is the share of partnership profits they are entitled to under the partnership agreement. Where the distributive share cannot be determined (e.g. if…

Partners in an Unincorporated Partnership are taxed in accordance with the wider Corporate Tax regime. In particular, individuals that are partners in an Unincorporated Partnership are taxed on the same basis as if they were conducting Business on their own. Therefore, they are only subject…

Unincorporated PartnershipsIndividuals, companies and other legal entities may join with others to form a partnership, usually established under a contract and jointly conduct Business or hold investments. Partnerships can take a range of different forms, and can be incorporated, such as Limited Liability Partnerships (LLPs),…

In certain circumstances, where an entire Business or an independent part of a Business is transferred in exchange for shares or other ownership interests, business restructuring relief may apply to eliminate the Corporate Tax impact of these transactions. Under this relief, no gains or losses…

It is a common practice for closely related Businesses to transfer assets and liabilities between each other for operational reasons. Ordinarily, there would be a taxable gain or loss where an asset or liability is transferred for an amount different to its net book value.…

In order to compute the Corporate Tax liabilities for a Taxable Person’s first Tax Period, it is necessary for Taxable Persons to have both an opening and a closing balance sheet. The opening balance sheet for the first Tax Period should be the closing balance…

In order to compute the Corporate Tax liabilities for a Taxable Person’s first Tax Period, it is necessary for Taxable Persons to have both an opening and a closing balance sheet. The opening balance sheet for the first Tax Period should be the closing balance…

Calculating Taxable Income is a two-step process: The Taxable Person must first determine their Accounting Income. This will be based on Financial Statements prepared according to accounting standards recognised in the UAE (IFRS or IFRS for SMEs). Qualifying Free Zone Persons and any other Taxable…

Where a Taxable Person’s deductible expenditure exceeds its income that is subject to Corporate Tax, it will have negative Taxable Income. This is known as a Tax Loss. Many businesses make losses at some point in their lifecycle. For example, a new business may initially…

 In addition to the submission of a general transfer pricing disclosure form, Taxable Persons need to maintain a ‘master file’ and a ‘local file’ if their Revenue in the relevant Tax Period is AED 200,000,000 or more, or they are part of a Multinational Enterprise…

Taxable Persons may be subject to certain transfer pricing disclosure requirements in case of entering into transactions or arrangements with Related Parties, which may allow the FTA to conduct a comprehensive and reasonable transfer pricing risk assessment, and confirm whether these transactions with Related Parties…

Where two parties are closely linked, their relationship may influence any transactions between them. There are rules in place to ensure that these closely linked parties (known as Related Parties) do not manipulate the values of transactions between themselves in order to obtain a Corporate…

It is common for costs to be incurred to entertain customers, shareholders, suppliers, or other business partners. However, this type of entertainment often contains a private element that would prevent the expenditure from being wholly and exclusively incurred for Business purposes. As the private element…

 Businesses regularly borrow money and take out loans for a wide variety of reasons, for example to purchase business assets, to meet costs, or increase working capital. As a result, Interest is a common business expense.   Interest expenditure can be deducted when calculating Taxable…

General deductibility rules Accounting Income is calculated by deducting a business’s expenditure from the Revenue generated in the same period. However, not all expenditure recognised under general accounting rules is deductible for Corporate Tax purposes. Non- deductible expenditure will need to be added back to…

Other income and gains may also be exempt if they are derived from a Participating Interest. This applies to holdings in both Resident and Non-Resident Participations. The requirements for a Participating Interest in both a Resident and Non-Resident are the same, save that in relation…

Dividends and other profit distributions received from foreign juridical persons are exempt from Corporate Tax if the recipient has a Participating Interest in the foreign company.139 A Participating Interest is a significant long-term ownership interest in the shares or capital of a juridical person (the…

Several exemptions are provided for within the Corporate Tax regime.135 The purpose of these exemptions is to either:•exempt income and capital gains arising from the activity of another juridical person or a foreign branch on the basis that it has already been taxed; or •align…

For the purpose of calculating their Taxable Income, businesses who prepare their Financial Statements using the Accrual Basis of Accounting may elect to take into account gains and losses on a realisation basis.128 Broadly, this election can be made either in relation to all assets…

It is common for assets or liabilities held by a Business to change in value for accounting purposes even where no actual transactions have taken place. For example, assets on the balance sheet may be revalued, or holdings of foreign currencies or loan liabilities denominated…

All tax laws define what is subject to tax, known as the tax base. For Corporate Tax purposes, the tax base is a Taxable Person’s Taxable Income. The Taxable income is determined as follows:   • Resident Persons are subject to Corporate Tax on their…