35 C
Dubai
Tuesday, July 23, 2024
spot_img

Explainer: Learn about the UAE’s first corporate tax

[ad_1]

Starting Thursday, U.S. companies and businesses united arab emirates A new tax will be imposed on corporate profits.

background: The UAE announced its first-ever corporate tax last January. There was previously no tax on business profits, making Dubai and Abu Dhabi attractive destinations for international companies. Instead, the UAE relies on VAT on most goods and services and business fees paid by companies.

A UAE official told Al-Monitor last year, UAE to reduce business expenses Given the new tax. In January, the UAE Ministry of Industry and Advanced Technology announced a reduction in government service fees. Abu Dhabi has also reduced operating expenses in 2021.

Like other Gulf states, the UAE is looking to reduce its dependence on oil and gas, so taxes are coming.

What does it mean: Companies and businesses in the UAE will pay the new tax for fiscal years beginning on or after June 1. According to the UAE Federal Tax Authority, the tax rates are:

  • 0% on taxable income up to AED 375,000 (approximately USD 100,000)
  • 9% on taxable income exceeding AED 375,000

A separate tax rate would apply to “large multinational companies” that meet criteria set by the Organization for Economic Co-operation and Development (OECD), which has not yet been specified. The UAE introduced corporate tax after consultation with the OECD, a program aimed at reducing tax avoidance.

The tax will apply to all businesses with a business license in the UAE, as well as banking businesses, foreign entities and individuals conducting business in the UAE “on a regular basis”, as well as businesses operating in a “free zone” (designated area) in the UAE. Foreigners can fully A place to own a company.

According to the Federal Tax Office, tax exemptions include the following:

  • personal salary
  • Companies engaged in the extraction of natural resources such as oil and natural gas
  • Interest on bank deposits and savings plans
  • Capital gains and other investment returns for foreign investors
  • Personal capital gains and other returns on personal investments
  • personal real estate investment

The UAE Finance Ministry also announced in April that government entities, public pensions and certain entities that benefit the public would be exempt.

Why it matters: The tax, which comes into effect after several money laundering and the recent sanctions evasion scandal.

UAE authorities have been working to strengthen relevant institutions to ensure compliance. In April 2022, the Federal Tax Office announced a whistleblowing program for potential tax evasion.

learn more: UAE’s new corporate tax part of series Bay Area Tax IncreasesSebastian Castelier wrote in the February Al-Monitor PRO memo.



[ad_2]

Source link

Related Articles

Ginco Properties Launches One Residence, Steps from 1 Burj Khalifa in Downtown Dubai

Ginco Properties Launches One Residence, Steps from Burj Khalifa in Downtown Dubai Dubai, UAE - 17 July 2024 — Ginco Properties, the developer behind successful...

Sreshta Farmer Producer Company Limited: Pioneering Technology-Driven Farming in Andhra Pradesh

Introduction to Sreshta Farms Sreshta Farmer Producer Company Limited (Sreshta Farms) was established in Kollipara, Andhra Pradesh, with the vision of creating a technology-driven agricultural...

The Rise of Home Salon Services in Dubai

The Rise of Home Salon Services in Dubai As sale season sweeps across Dubai, many residents are turning to home salon services in dubai to...

Axi and Manchester City Women’s Team Kick Off big ‘The Mentality Edge’ Campaign 1

Axi and Manchester City Women’s Team Kick Off 'The Mentality Edge' Campaign In a dynamic culmination to the 2023/24 football season, leading online FX and...

Garuda Advertising Launches Teleforce: A Telecom, Marketing, and Sales CRM Platform

Garuda Advertising announces the launch of Teleforce, a Telecom, Marketing, and Sales CRM designed to empower businesses with a comprehensive Communication Platform as a...

Latest Articles