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What is Corporate Tax?

Corporate Tax is a direct tax levied on the net income or profit of corporations and other businesses.

This is also called as “Corporate Income Tax” or “Business Profits Tax”.

Seamless corporate taxation services in Dubai


    Implementation Date of CT

    The UAE CT regime will become effective for financial years starting on or after 1 June 2023.

    Entity Financial Year UAE CT applicable from
    A 1 Jan to 31 Dec 1 Jan 24 onwards
    B 1 Apr to 31 Mar 1 Apr 24 onwards
    C 1 Oct to 30 Sep 1 Oct 23 onwards
    D 1 Jul to 30 Jun 1 Jul 23 onwards

    Corporate Tax is Applicable to

    Resident Person

    • Person incorporated in UAE
    • Person incorporated outside UAE and managed and controlled in UAE
    • Natural person conducting business activity

    Person incorporated in UAE includes:

    • LLCs, PSCs, PJSCs
    • Individual, freelancer
    • Foreign subsidiary in UAE
    • Banks
    • Entities in Free zones
    • Sole establishments & civil(individual capacity)

    Non-Resident Person

    • Person having Permanent Establishment (PE) in UAE
    • Derives income from UAE
    • Has any connection in thestate (cabinet decision)

    Permanent Establishment (PE) means:

    1. Fixed or permanent place in the State
      • A branch
      • An office
      • A factory
      • A workshop
      • similar
    2. A Person habitually conducts business for non-resident

    To understand the impact of Corporate Tax on your business

    Corporate Tax rates (other than Free Zone)

    0% – on the portion of Taxable Income not exceeding AED 375,000 (to be confirmed by the cabinet decision)

    9% – on the portion of Taxable Income exceeding AED 375,000 (to be confirmed by the cabinet decision)

    Transfer Pricing

    All about Spectrum Accounting Services in Dubai
    • Transfer Pricing Regulation will apply to UAE Mainland as well as Free Zones
    • A Qualified Free Zone can continue to be qualified for 0% corporate taxes if it meets transfer pricing regulations and documentation (if not followed a Free Zone can lose the benefit 0% CT).
    • The Tax registrants need to fulfill guidelines of Arms Length Price (ALP).
    • 5 methods as mentioned by OECD can be used to compute ALP.
    • Choice of method depends on Contractual terms, Characterisation, economic circumstances, FAR analysis and business strategies.
    • The Most Appropriate Method (best suitable) concept used rather than Most Preferred Methods (hierarchy).
    • The corresponding adjustment concept is brought in if a foreign tax administration makes adjustments to the ALP of the taxpayer.
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