Corporate Tax UAE
Who should register for Corporate Business Tax in the UAE?
Requirement for Corporate Business Tax Registration
The UAE Federal Tax Authority mandates that all taxable individuals must register for UAE Corporate Tax and obtain a Corporate Tax Registration Number. However, non-resident individuals earning state-sourced income without a permanent establishment or nexus in the UAE are exempt from registration. This exemption is allowed because they will not have a corporate tax liability in the UAE, and their home country holds the primary taxing authority.
If an individual seeks exemption from corporate tax, such as an investment fund seeking to be treated as a qualifying investment fund, they must first register with the Federal Tax Authority before applying for exemption from corporate tax.
Who is subject to UAE Corporate Tax?
| Clause | Description |
|---|---|
| 1 | Taxable Persons |
| - UAE juridical persons, including Free Zone Persons (e.g., private or public joint stock companies, limited liability companies) incorporated or recognized under UAE laws. | |
| - Non-UAE juridical persons (incorporated outside the UAE) managed and controlled in the UAE. | |
| - Natural persons (individuals) conducting Business or Business Activity in the UAE (subject to Cabinet Decision). | |
| - Non-Resident Persons with Permanent Establishment or UAE sourced income under Corporate Tax. | |
| 2 | Categories of Taxable Persons |
| - Resident Person: Determined by specific factors outlined in the Corporate Tax Law, distinct from ordinary tax and legal residency. | |
| - Non-Resident Person: Taxable Persons not meeting Resident criteria. | |
| 3 | Resident Persons Criteria |
| - (a) UAE-incorporated juridical persons automatically considered Resident Persons. | |
| - (b) Juridical persons from foreign jurisdictions managed and controlled in the UAE are Resident Persons. | |
| - (c) Natural persons conducting Business in the UAE are Resident Persons for income derived from that activity. | |
| - (d) Cabinet Decision may include other Persons within Resident category. | |
| 4 | Non-Resident Persons Criteria |
| - (a) Non-Resident Persons with activities through Permanent Establishment in the UAE subject to Corporate Tax. | |
| - (b) Non-Resident Persons receiving State Sourced Income also considered Non-Resident for Corporate Tax. | |
| - (c) Cabinet Decision may specify other circumstances for Non-Resident classification. | |
| 5 | UAE Branches of Resident Persons |
| - UAE branches treated as extensions of head office; income and expenditure of all domestic branches included in Tax Return. |
Corporate tax for Multinational Companies
Is Corporate Tax same as the VAT?
While value-added tax is computed by adding the value at each stage of manufacturing, corporate tax in Dubai is based on earnings. Unlike with VAT, where businesses must charge VAT and return it to the FTA, firms are expected to file taxes and subsequently pay corporate taxes on the earnings. In conclusion, whereas value-added taxes are based on consumption and are imposed on consumers for the products and services they use, corporation taxes are assessed based on profits.
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