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The UAE has officially released the Federal Decree on Corporate Taxation (Federal Decree No. 47 of 2022) applicable to all emirates. Applies to resident companies as well as non-residents with a permanent establishment in the emirate. This means the beginning of a new era of taxation for businesses as they face the corporate tax law which comes into effect on June 1, 2023. One of the goals of the law is to meet international standards of tax transparency and avoidance of harmful tax practices.
First, it is worth mentioning that corporate tax law contains features that represent international tax best practice. As such, some guidance can be drawn from OECD standards and practices regarding tax calculation and tax filing. Second, the new UAE corporate tax regime has far-reaching implications for businesses operating in the UAE. In addition to a detailed assessment of the application of corporate tax laws, businesses must develop processes and procedures to manage tax compliance. So let’s dig a little deeper into the substantive terms related to the impact on businesses:
From the first financial year commencing on or after 1 June 2023, businesses will be subject to 9% UAE corporate tax on corporate profits exceeding AED 375,000. Therefore, different taxation and compliance periods will apply depending on the business’s subsequent financial year: for businesses with a financial year from June 1 to May 31, corporate tax returns must be filed by February 28, 2025. In contrast, the deadline for tax returns for companies with a financial year from January 1 to December 31 is September 30, 2025.
Taxable income (i.e. net profit or loss before tax) is derived from the financial statements. However, this income will be subject to certain adjustments to determine taxable income under corporate tax law provisions. There is no doubt that the accuracy of financial statements and business data is now more important to businesses.
It must be emphasized that free zone companies are also required to fulfill certain compliance obligations such as tax registration, filing corporate tax returns ¬ even though they do not have to pay any tax on their qualifying income – satisfying transfer pricing requirements and satisfying any other conditions prescribed by a ministerial decision.
As more details are released through a series of ministerial decisions in the coming months, businesses should continue to monitor these developments and prepare for compliance by 1 June 2023. The “International Tax Compliance Platform” is a professional assistance with DATEV and on an international scale on certain tax compliance issues. The portal enables the transfer of real-time accounting and tax data from a business/permanent establishment in the UAE to Germany (parent company), distribution of accounting data to the German accounting system, general exchange of information between affiliated companies, statistics of economic data of the business and Calculation of corporate tax. In addition, it provides tax audit certification documents of DATEV standard quality, which constitute a great advantage in the disclosure of accounting and tax data. The platform also offers a high degree of flexibility so that legal and economic changes can be smoothly adapted.
for navigation Current Changing Tax Regulationswe have established a strategic partnership with IFZA, UAE’s Leading Free Zone Community.
IFZA is committed to supporting the community in adhering to the latest regulations.The Free Zone community began implementing several activities such as Workshops, webinars and seminars Available in multiple languages, it is designed to empower members around the world to face the changes that are coming to us business ecosystem.
For more information visit: tax2compliance.com or write to: anfragen@itcplatform.de
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