Implementation of Corporate Tax in the UAE

From June 1, 2023, businesses earning a taxable income of 375,000 AED must implement Corporate Tax in UAE and comply with the UAE Corporate Tax (CT) law (Everyone must register by CT law). Ensure you have the necessary documents required for corporate tax registration. 9% CT applies to each taxable person, and it is recommended to engage a tax advisor in UAE. There’s a relief for small businesses. Moreover, the UAE gets various benefits from over 40 free zones with some regulations and exemptions. Notably, no CT is charged on employment-based income. 

Implementing CT requires businesses to comply with new tax laws, maintain accurate financial records, and file tax returns to the governing authorities. Businesses need to engage tax consultants in the UAE to calculate tax liabilities, update the accounting system, and train their employees about the new tax laws.

CT Rate in UAE

 The Corporate Tax rate in the UAE is distributed as follows:

• 0% for up to AED 375,000 profit
• 9% for above AED 375,000 profit

Steps to implement Corporate Tax UAE

There are several steps for the implementation of CT in UAE. You need to understand these steps.

Review Accounting Books: First of all, review the accounting books to ensure accuracy and compliance with accounting policies related to Corporate Tax liabilities.

Identify Revenue and Expenses: In financial statements determine revenue and expenses for Corporate tax calculation.

Select Filing Methods: Examine different filing methods or reporting models. This involves deciding whether to use a Tax group or separate Corporate Tax returns for each entity, considering potential tax benefits associated with each reporting method.

Restructure Legal and Capital Structures: Identify the need for restructuring legal and capital structures to align them with the requirements of Corporate Tax. This might involve changes to the system and technology infrastructure.

Assess Systems and Technology: Implement relevant technologies to integrate tax-related processes into the broader financial and operational systems.

Focus on Transfer Pricing:  Focus on transfer pricing, taking into account various requirements in transfer pricing documentation. Ensure that businesses engaging in transactions with related entities comply with transfer pricing regulations.

Documentation: Maintain detailed documentation of transfer pricing arrangements and transactions. Ensure that the documentation meets the specific requirements outlined in Corporate Tax policies.

Compliance with Regulations: Ensure that the chosen filing methods and restructuring efforts comply with all relevant Corporate Tax regulations.

Technology Integration: Implement relevant technologies to integrate tax-related processes into the broader financial and operational systems.

Training and Awareness: Provide training to relevant personnel on the updated Corporate Tax policies, filing methods, and any changes to systems and technology.

Continuous Monitoring: Establish a continuous monitoring and evaluation system to ensure ongoing compliance with Corporate Tax regulations.

Engage with Tax Authorities: Engage with tax authorities to seek guidance, clarification, or address any queries related to Corporate Tax.

Adaptation and Improvement: Regularly review the effectiveness of implemented changes and make adaptations or improvements as necessary.

Corporate Tax Implementation Services in UAE

BRISK Corporate Tax Services in UAE assists your business in complying with the new tax laws.  We help in assessing your tax liability, optimizing tax structure, upgrading your accounting systems, and training your staff on the new tax laws. BRISK provides ongoing support to ensure compliance and tackle all the tax filing and reporting process issues. We help you in determining the opportunities and difficulties with Corporate tax implementation through our following services in the UAE.

• Corporate Tax Advisory services: Offer expert counsel on local tax regulations, optimizing structures to enhance businesses’ fiscal performance within the Emirates’ dynamic economic framework.

• Corporate Tax Compliance Services: Offer meticulous guidance, ensuring adherence to local tax laws and regulations, and fostering seamless compliance for businesses operating within the Emirates’ jurisdiction.

• Corporate Tax consultancy services: We provide strategic insights and tailored solutions, navigating the complexities of local tax codes to optimize financial structures for businesses within the Emirates’ unique regulatory environment.