Get Expert Assistance in UAE for Corporate Tax Filling.
Corporate Tax is a form of Direct Tax that is to be levied on all Companies operating in the UAE. For companies with a net profit of AED 375,000 and above the rate of Corporate Tax in UAE is 9%. It is one of the lowest Corporate Tax rates in the world and the Corporate Tax collected from the companies operating in the UAE will be used for the development aspects of the Country.
Companies operating in the Free Zones can avail of the preferential Corporate Tax Treatment of Zero percent. It is by meeting certain requirements of earning a ‘Qualifying Income’ from ‘Qualifying Activities’ and not from any ‘Excluded Activities’ that entrepreneurs must seek assistance from expert Tax Consultants such as AURION for determining the Corporate Tax Applicability for their company.
All companies in the UAE must Register for Corporate Tax, connect with our expert team to know more about Corporate Tax Registration in the UAE. Also, here is a Corporate Tax Guide that will be helpful to learn more about Corporate Tax and its applicability in your company.
In the Free Zones, companies that are qualified to get a Zero rating of Corporate Tax have to meet certain criteria as follows. If a Free Zone person earns “qualifying income” they can be called a “Qualifying Free Zone Person” (QFZP) and get the zero-rated Corporate Tax Treatment.
For a ‘Qualifying Free Zone’ person to earn ‘Qualifying Income’; the income must be generated in any of the following ways.
Following is the list of activities that can be conducted with a Non-free zone person.
Excluded Activities:
Corporate Tax Registration is mandatory for all licensees including those who have zero turnover or no activity. Even if the turnover is 100% outside UAE (even in case of high sea sales) registration is required as the UAE resident person is taxed on worldwide income.
Also, Branches are not treated as separate legal entities and do not require separate Corporate Tax Registration. Branches of foreign companies are also to be registered for Corporate Tax in UAE. Exemptions can be availed under Article 24 of the Decree-law to exclude the income.
For all new companies registered in UAE, there is a 3-month time from the date of License issuance to submit the Corporate Tax Registration Application. Existing companies in UAE, based on their license issue date (irrespective of year of issuance) must follow the below table and start their Corporate Tax Registration Application process.
Date of License issuance irrespective of year of issuance | Deadline for submitting a Tax Registration application |
1 January – 31 January | 31 May 2024 |
1 February – 28/29 February | 31 May 2024 |
1 March – 31 March | 30 June 2024 |
1 April – 30 April | 30 June 2024 |
1 May – 31 May | 31 July 2024 |
1 June – 30 June | 31 August 2024 |
1 July – 31 July | 30 September 2024 |
1 August – 31 August | 31 October 2024 |
1 September – 30 September | 31 October 2024 |
1 October – 31 October | 30 November 2024 |
1 November – 30 November | 30 November 2024 |
1 December – 31 December | 31 December 2024 |
Following are the documents required for the Corporate Tax Registration. AURION will assist in the process of preparing the required documents and registering your company for Corporate Tax. It is highly advised that companies begin the process as early as possible to ensure timely submission of the required documents.
A Designated Zone (E.g., JAFZA, DAFZA, etc.,) is a free zone but a free zone need not be a Designated Zone (E.g., DMCC, IFZA, DSO)
Only Income generated from “Qualifying activities” (Qualifying income) by a free zone person (Qualifying free zone person) is zero-rated for UAE CT
Income earned from these 13 activities that are listed under Article 2 Ministerial Decision 139 of 2023, are considered as “Qualifying Activities”.
Activities that are not listed under Qualifying Activities either fall under excluded activities or Non-qualifying activities. Income from such activities is subject to ‘De minimis’ requirements. That is, such income should be lower than 5% of the total revenue or AED 5 million to remain as a Qualifying free zone person. Refer Article 4
Excluded activities are listed under Article 3 of Ministerial Decision 139. Excluded activities are part of Non-qualifying income. Non-qualifying activities are the activities where the other party to the transaction is a Non-qualifying free zone person. (For example, the distribution of goods is a qualifying activity but if done to a Non-qualifying free zone person, it becomes a Non-qualifying activity)
The activity of distributing goods or materials must be undertaken “IN” or “From” a Designated Zone and the goods or materials entering the “State” “must be imported through the Designated Zone “ Therefore, only the following trading activities are treated as qualified activities.
Refer to Article 2 (1) (k) and Article 2 (3) of Ministerial Decision 139
No. Only trading activity done “IN” and “FROM” a Designated zone are zero rated from CT. Refer to Article 2 (1) (k) and Article 2 (3) of Ministerial Decision 139
As per Article 3 (1) (a) of Cabinet Decision) income derived “from a free zone person” falls under zero-rated activities. Hence, services provided to a free zone person by a free zone person will be zero rated, provided income derived from services provided to a Non-free zone person falls under the De-minimis limit mentioned under Question no 3.
No. As per Article 3 (1) (a) of Cabinet Decision) income derived “from a free zone person” only falls under zero-rated activities. (De-minimis limit can be considered for services provided to a Non-free zone person). Therefore services provided to a foreign person will be subject to UAE CT.
Not zero-rated. As per Article 1 of Cabinet Decision 55 (definitions), a place of the presence of a qualified free zone person outside the free zone is treated as Domestic Permanent Establishment as per Article 4 (4) and subject to the provisions of Article 14 of Decree-law (Treated as a permanent establishment of a Non-resident person).
As per Article 3 (1) of the Cabinet Decision, income attributable to a Domestic Permanent Establishment (can be a branch or a related party) shall not be included in qualifying income. Article 3 (5) of Cabinet Decision 55 further clarifies this point. Hence income from a branch in the mainland is allowed only subject to the limit of De minimis explained under Question 3 above.
The free zone entity is treated as a juridical person for UAE CT purposes. Therefore, will be eligible for a zero rate of tax on “Qualifying income” earned by the branch and also subject to the De Minimis limit under Article 4 of the Cabinet Decision.
Apart from meeting the conditions set out in Cabinet Decision No 55 and Ministerial Decision no 139, a qualifying free zone must,
(Refer to Article 18(1) of decree law and Article 5 (1) of Ministerial decision 139 of 2023.
Refer to Article 7 of Cabinet Decision 55 of 2023.
The qualifying free zone person shall cease to be a qualifying free zone person
Refer to Article 5 (2) of Ministerial Decision 139 of 2023.
For any inquiry regarding Corporate Tax Applicability in UAE, connect with our expert Tax Consultants right away!
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