The UAE is implementing a new corporate tax, and businesses need to take extra precautions to ensure they are fully compliant with local laws. Failure to do so can result in hefty penalties, including fines and even imprisonment. To avoid these consequences, businesses should consider hiring an accounting and tax service provider that is well-versed in UAE tax law and can help them navigate these complex regulations.
The Corporate Tax In UAE will be a federal tax for financial years beginning on or after June 1, 2023. All companies and businesses with a physical presence in the UAE are required to pay corporate tax. This includes both local and foreign companies. It’s important to consult with a tax consultant or accounting service that is well-versed in UAE tax law so you can ensure you’re fully compliant. Ignorance of the law is not an excuse, and businesses that are not compliant can face hefty penalties, including fines and imprisonment.
In preparation for the new corporate tax, businesses should take the following steps:
1. Familiarize Yourself With The New Law:
The corporate tax in UAE is governed by Federal Decree-Law No. (8) of 2017, which was issued by the UAE MOF on January 31, 2022. This law lays out the specific details of the new CT, including how it will be calculated and what entities are subject to it. It’s important for businesses to read and understand this law so they can ensure they’re compliant.
2. Calculate Your Taxable Income:
To calculate your taxable income, you first need to determine your business’ total income. This includes all revenue from sales, services rendered, interests, royalties, and any other income generated by your company. Once you have your total income, you then need to subtract any allowable deductions. The most common deductions are business expenses, such as rent, employee salaries, marketing costs, and other operating expenses. It’s important to note that certain expenses are not allowed for the deduction, such as personal expenses or those that are not related to the operation of your business.
3. File Your Tax Return:
Once you’ve calculated your taxable income, you need to file a tax return with the UAE Federal Tax Authority (FTA). This needs to be done annually and can be done online. The deadline and further updates on the filing procedures are yet to be released by the authorities.
4. Pay Your Corporate Tax:
Once you’ve filed your tax return, you then need to pay your Corporate Tax in UAE. This can be done online, through the mail, or at a bank.
5. Find an Accountant Well-Versed in UAE Tax Law:
Corporate tax can be complex and confusing, so it’s important to find an accountant who is well-versed in these laws. They will be able to help you calculate your taxable income, file your tax return, and pay your corporate
