There are three pivotal obligations demand careful attention in UAE. From the inception of UAE Corporate Tax Law registration in June 2023 to the meticulous maintenance of accurate accounting records. As the United Arab Emirates (UAE) continues to evolve as a business powerhouse. It introduces new dimensions to its regulatory landscape. For enterprises aiming to thrive within this vibrant environment. Each step plays a crucial role in both compliance and strategic advantage. We search into these indispensable tasks, unveiling their significance in fostering a resilient and prosperous business journey in the UAE.

UAE Corporate Tax Law

In the vibrant tapestry of the United Arab Emirates (UAE) business landscape. Adherence to essential regulations forms the cornerstone of success. As this dynamic nation ushers in new developments. Businesses are presented with a trio of paramount responsibilities that pave the way for sustainable growth. Commencing from June 2023, the requirement to register for corporate tax marks a pivotal juncture. Followed closely by the meticulous task of maintaining precise Accounting Records. Lastly, to complete this triad of obligations, businesses are tasked with the critical duty of filing a corporate tax submission with the Federal Tax Authority (FTA).

In UAE, all businesses must do these 3 things, these are:

1.     Register for UAE corporate tax law from June 2023 onwards

• Your business will be subject to UAE corporate tax law from your first financial year starting on or after 1 June 2023.
• Every business will need to register for corporate tax, including free zone companies and freelancers.
• Corporate tax is separate from VAT. Even if you already have a VAT number, you will still need to register for UAE corporate tax law.

Undertaking a transformative stride toward economic evolution. The United Arab Emirates (UAE) has mandated a significant directive for businesses. Starting June 2023, companies are required to initiate registration for corporate tax, marking a pivotal milestone. This mandate signifies a profound shift in the fiscal landscape of the UAE. Indicating a transition towards a more diversified and sustainable economic future. As businesses navigate this uncharted territory. Comprehending the intricacies and implications of this obligation becomes not only a matter of compliance. But also a strategic endeavor to position oneself advantageously within this evolving economic paradigm.

2.     Keep Proper Accounting Records

• The UAE corporate tax law requires specific accounting records to be kept.
• Our team can help with your accounting and bookkeeping requirements and ensure your reporting is compliant with the law.
• Your company’s tax obligations will depend on what your accounting records say about your business.

Example: If you are exempt from corporate tax or if you qualify for the Small Business Relief rule, your accounting records must support your position.

In the intricate weave of business operations, the practice of maintaining meticulous financial documentation stands as an indispensable thread. This is particularly crucial within the United Arab Emirates (UAE), where the obligation to keep proper accounting records transcends being a mere formality. These records serve as the compass guiding businesses through the intricate pathways of financial management and compliance with accounting services in the UAE. As regulations intertwine with strategic financial decisions, accurate and comprehensive accounting records become the cornerstone upon which prudent choices are made, risks are mitigated, and growth is fostered. In this landscape, the significance of this practice echoes loudly, resonating with the essence of sustainable business success in the UAE and beyond.

3.     File a corporate tax submission with the Federal Tax Authority (FTA)

• This step needs to be taken after the end of your first taxable period.
• Even if you qualify for an exemption or tax relief, you still need to declare this by filing a tax submission with the FTA.
• Our highly experienced tax advisors can ensure that you benefit from any exemption or tax relief that is available to you.

IMPORTANT: While not all businesses will have to pay UAE corporate tax law, every business – even those in free zones – must comply with these three steps.

Culminating the journey of financial responsibility within the United Arab Emirates (UAE), businesses encounter a pivotal milestone – the filing of UAE corporate tax law submission with the esteemed Federal Tax Authority (FTA). Beyond being a regulatory obligation, this act carries profound implications for a company’s financial transparency and adherence to the UAE’s taxation framework. As the final brushstroke on the canvas of corporate fiscal endeavors, this submission encapsulates a business’s commitment to not only compliance but also to contributing harmoniously to the UAE’s economic tapestry. Through this process, the connection between business and government converges, solidifying the role of enterprises as partners in the nation’s ongoing prosperity.

How much is the corporate tax in the UAE?

The UAE Ministry of Finance (MOF) has developed a taxation policy with three tiers:

• TIER 1 (0% Tax Rate)

Businesses with annual net profits of up to AED 375,000 are subject to a 0% tax rate.

• PROFITS UP TO AED 375,000 = 0% Tax Rate with TIER 2 (9% Tax Rate)

Businesses are subject to a 9% tax rate on annual net profits that exceed AED 375,000.

• PROFITS OVER AED 375,000 = 9% Tax Rate with TIER 3 (Different Tax Rate)

Large multinational companies may be subject to a higher tax rate, subject to Pillar Two of the Organization for Economic Cooperation and Development (OECD) base erosion and profit shifting (BEPS) project. Companies with a total global revenue of over EUR 750 million (around AED 3.15 billion) will belong to this category.

• PROFITS OVER AED 3.5 billion = Higher Tax Rate

How Tax Agencies can help you?

Tax agencies in the UAE play a pivotal role in providing valuable assistance to individuals and businesses. A Tax Agency in the UAE serves as a reliable resource for navigating the complex landscape of UAE Corporate Tax Law regulations and requirements. They offer expert guidance on tax planning, compliance, and reporting, ensuring that taxpayers understand their obligations and maximize their deductions. With a deep understanding of local tax laws and international standards, a reputable Tax Agency in the UAE can help streamline processes, minimize liabilities, and foster a transparent and efficient tax environment for all stakeholders.

Manage your corporate tax with MASAR

At MASAR, we have a team of highly qualified and experienced accountants and tax advisors who can guide you in navigating the UAE corporate tax law. Whether you are required to pay corporate tax or qualify for an exemption, we will help you establish an efficient and scalable accounting system, so you can continue running your business smoothly. Our tax specialists will advise you on the required documents and steps to take, ensuring your business is fully tax compliant.

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