9 IMPORTANT ASPECTS OF CORPORATE TAX
Corporate tax in the UAE will be introduced on the 1st of June 2023. The Federal Tax Authority changed the online portal to the New EMARA tax portal to welcome corporate tax. There are 9 Important Aspects of Corporate Tax in the UAE according to the Authority.
1) REGISTRATION:
The computed tomography scan will absolutely be free and independent of any kind of VAT registration. Any kind of business including (free zones, companies, and individuals) would be required to register even if the taxable income is less than Dh375,000 or exempt. In the next 6 years, an invitation will be sent to select businesses by FTA(Federal tax authority). Businesses don’t need to take any action. if the businesses register at least before the due date for tax return presentation (nine months from the end of the relevant financial year), then there is no need to take penalties relating to any certification.
2) FUTURE LAWS AND REGULATIONS:
In an order handed down by a judge that solves all the problems in a court case, CT was also issued. CT laws would not have separate ‘executive regulations’ but different cabinet choices would be issued from time to time containing characteristics and counseling for executing CT.
3) FREE ZONES:
All the dominant attributes of “Qualifying FZ” and “Qualifying income” will soon be announced publicly. FZ business will need to maintain sufficient substance in the UAE and also need to meet other conditions to profit tax immunity.
4) individuals
Corporate tax(CT) is an inaccurate title as even individuals who are engaged in business such as motivators on social media, consultants, and civil companies could be subject to CT. The session began again and individuals managing business activities would be hidden under CT.
5) BUSINESS HAVING MULTIPLE ENTITIES IN THE UAE:
An explicit confirmation from FTA is inappropriate to consider two or more UAE institutions worthy to form a ‘Qualifying group’ if the conditions are fulfilled. Intra-group transactions could be ignored for tax motives.
For all the group members a ‘ tax group’ can submit a single tax. The idea of group tax under the CT laws and VAT laws will be distinct. Simplistically, if you’ve created a VAT tax group then it is not important to form the same CT tax group.
6) Anti-abuse provisions :
The session made it prominent that businesses should have private reasons for reshuffling. A rearrangement, without any proper reasons aimed to consume tax benefits, could be overlooked under anti-abuse rules and regulations.
7) Minor reliefs in buisness:
Adding taxable entrance of Dh 375,000 businesses qualified for small business relief would be treated as having Nil tax income. And its detail will be presented soon.
8) ACCOUNTING AND DOCUMENTATION:
Businesses don’t have to get ready to prepare a separate set of books for tax purposes at all. Because taxable profit will be achieved from the financial books of account of the businesses. Eventually,
accepted accounting standards, such as IFRS, should be acceptable. Simple accounting methods will be permissible for small businesses and others. It’s very important to maintain all the documents and records in any business at least for seven to eight years. In case there is any issue like if a business is not taxable, or didn’t pay tax in any specific year, the proof is available to clarify any such problem.
9) International tax aspects:
If a foreign company’s PoEM(place of effective management) is in UAE, it will be covered under CT. It is winded up by making it prominent that the businesses have enough time to prepare it for CT. Last year in Feb 2022, the ministry also admonished that businesses need to avoid CT as a Y2K hysteria.