5 months ago
21 June 2022
TABLE OF CONTENTS
The UAE's Ministry of Finance has released a public consultation document. The document contains information and primary aspects of the proposed UAE CT regime. The purpose of the document is to seek the views and comments of business communities and other interested parties. Interested people may provide their comments on or before 19 May 2022.
The blog series is an attempt to make the consultation paper more understandable so that you may provide feedback. In this blog, we will explore the objective of UAE CT and who are the taxable persons.
Other aspects covered in the blog series include:
The United Arab Emirates is a global corporate hub and financial center. It is also a signatory to the OECD's Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The UAE supports the worldwide minimum effective tax rate suggested by the OECD.
UAE's proposed tax rate will be one of the lowest in the world. To stay competitive and maintain investor trust.
The Ministry of Finance is committed to adopting international best practices. The key principles of the Tax regime are:
The CT Law would apply to all businesses and commercial activities in the UAE. Residency status is key in determining whether business profits will be subject to CT in the UAE. A UAE resident person will be taxable in the UAE on their worldwide income.
A Non-resident will be subject to UAE CT on the income sourced in the UAE. It will be subject to tax only if they have a Permanent Establishment (PE) in the UAE. A PE in the UAE will be determined by the following two tests:
Free Zone entities are also liable to CT. However, the rate of tax will be 0% subject to meeting specified exemption criteria.
The individuals are not taxed under the Corporate Tax regime. However, income earned from carrying out business or commercial activities is taxable.
Salary income, income from real estate investments, and other investment income will not be taxed.
The real estate income will still be exempt if the investment is held through a private or family trust.
It is to be mentioned here that many investors have held the properties under Offshore entities or Restricted companies. Whether such entities/companies are considered as passthrough entities for CT is to be seen.
Income may be considered as UAE sourced if:
The following will be exempted from UAE CT:
Ministry of Finance is giving adequate time to individuals and businesses alike to make an assessment of their business and commercial activities to determine their taxpayer position.
Learn more about filing a single tax return for group companies under the new CT Law in UAE
Have a say in how the UAE Corporate Tax laws should be - submit your comments and learn more about the new CT Law.
All the answers on Tax loss carry forward under the new Corporate Tax Law.
Calculating your tax liability under the Corporate Tax Law
Are companies in UAE Free Zones subject to Corporate taxes?
The Corporate Tax Law is a Federal Law that will apply to all businesses and commercial activities(legal entities)in the UAE. Find out more.