In January 2022, the UAE Ministry of Finance announced the introduction of a UAE Corporate Tax (CT) on the net profits of companies. Corporate tax is a direct tax levied on the net profit or profit of a company or other entity.
The United Arab Emirates corporate tax applies to all businesses in the UAE except extraction of natural resources, which is subject to emirate-level corporate tax. Foreign companies and individuals are subject to corporate income tax only if they have a continuous or regular trade or business in the UAE.
The United Arab Emirates corporate tax applies equally to all categories of profit and other (net) income reported in financial statements prepared in accordance with internationally accepted accounting standards.
Why UAE Corporate Tax?
Applying corporate tax in the United Arab Emirates is considered a competitive advantage for attracting foreign investment to the United Arab Emirates. Paying corporate tax may be more beneficial to a business owner than paying additional personal income tax. Corporate tax is one of the international best practices that “consolidates the UAE’s position as a major global hub for business and investment. will be achieved, reaffirming our commitment to tax transparency and preventing harmful tax practices.
Corporate tax rates in GCC countries:
Corporate tax rates vary from 10% in Qatar to 15% in Kuwait and Oman and 20% in Saudi Arabia. The United Arab Emirates has announced that it will introduce a 9% corporate tax on business profits from 1 June 2023. Bahrain is also looking to introduce it in 2023.
In Kuwait, Saudi Arabia and Qatar, UAE Corporate Tax is levied on profit sharing attributable to non-GCC shareholders of locally incorporated companies. For example, in Saudi Arabia, corporate tax applies only to income earned by non-Saudi owners.
Book Importance in UAE Corporate Tax:
All GCC countries, including the United Arab Emirates, are living in an era of digital transformation where books are digitized using accounting or business management software. With the introduction of VAT a few years ago and the proposed corporate tax, keeping books of accounts is no longer an option, but a requirement to automate it using business management software.
Books and financial statements become even more important to a business given how companies are calculated. This is because the net income in these statements is the basis for arriving at the corporate tax that the company has to pay.
The accuracy of your business data determines the accuracy of your financial statements and determines the appropriate amount of corporate taxes. Now is the right time for businesses to invest in reliable business management software and be ready for corporate tax before it is implemented.
How can TallyPrime help me?
TallyPrime is business management software that lets you manage the growing needs of your business.
For a smooth transition into the corporate tax era, having such powerful integrated software should be a top priority for businesses in the UAE.
Besides? In addition to making your business corporate tax ready, it includes full UAE VAT support, from generating tax invoices to filing accurate VAT returns, and many other features such as: increase.
Generate business reports for accounting, inventory, and financial statements such as income statements and balance sheets.
VAT rate setup makes setting up your tax details easy and fast
Easily manage accurate and consistent books.
Create VAT compliant invoices while managing different types of VAT supplies such as exports, imports and more.
Complete your VAT declaration in a few easy steps
Easy to manage daily financial transactions