Corporate tax in the UAE

Corporate Tax in the UAE

The release of the Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses is creating unprecedented change in the tax environment of the UAE market.

While the new tax is referred to as corporate tax (CT), it does not just apply to companies. Individuals, whether resident or not are subject to corporate tax on their income derived from a business activity carried on in the UAE.

Resident companies are subject to corporate tax (CT) on their worldwide taxable income (subject to certain exemptions), while non-resident companies are taxed if:

• They have a permanent establishment (PE) in the UAE;
• They have income sourced from the UAE; or
• They have a nexus with the UAE.

Preparation for Corporate Tax in the UAE

The introduction of UAE corporate tax (CT) might have an impact on the compliance costs of most UAE businesses. Therefore, those who may be subject to UAE corporate tax (CT) must take the law's operational and financial implications into account. We advise those who have not yet begun evaluating the impact to be proactive in order to ensure a smooth transition.

Businesses must first evaluate the technical implications of the law before considering how well-prepared their operations are to handle the compliance, reporting, and strategy requirements related to this. This should involve evaluating the suitability of their accounting policies, legal contracts, reporting systems, finance and tax functions, and transfer pricing (TP) paperwork.

Our team has already begun working on tax effect analyses, transfer pricing studies, and operational implementation planning for several UAE-based companies, including system and process modifications.

How we can help

Mazars in the UAE can support in providing impact tax assessment on your business starting from analysis based on legislation to identifying restructuring and optimisation opportunities running through implementation in drafting necessary changes to policies, legal contracts etc. and assisting in the post implementation in the corporate tax (CT) registrations, tax compliance review, preparation, and submission of corporate tax (CT) returns.

Our professionals have deep experience in all areas of tax, providing businesses at all stages of their growth with specialist advice, ranging from corporate tax to transfer pricing and corporate structuring, to national and international transactions, to ensuring tax compliance when setting up new operations.

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