HayyaTax, Leading Tax Consultancy in Dubai

Corporate tax in the UAE is a tax levied on the net income or profits of companies operating in the country. It serves as a primary source of revenue for the government and aims to regulate the taxation of business profits within the UAE.

The corporate tax rate in the UAE is 9% for businesses earning taxable income of AED 375,000 or more. Businesses earning less than this threshold will be subject to a 0% tax rate. The regime became effective starting June 1, 2023.

All businesses operating in the UAE, including foreign entities and individuals with business activities, must comply with corporate tax regulations. Free zone businesses also need to adhere to these rules unless they meet specific exemptions

For tax filing in Dubai, businesses are required to submit various documents including financial statements (balance sheet and profit & loss), tax returns, supporting invoices and receipts for expenses, and any relevant agreements or contracts. Detailed documentation is essential to ensure full compliance with corporate tax laws.

All businesses, except those with special exemptions, are required to maintain audited financial statements. This includes businesses subject to corporate tax, as these statements ensure accurate reporting of taxable income.

Penalties for non-compliance can include fines, penalties, and interest on overdue taxes. The Federal Tax Authority (FTA) will impose specific penalties depending on the nature and severity of the violation.

Business expenses directly related to generating taxable income are typically eligible for corporate tax deductions in the UAE. This includes employee salaries, rent, utility bills, business travel expenses, and other operational costs. Proper documentation is necessary to support these deductions during tax filing in Dubai.

A tax consultancy in Dubai helps businesses by managing tax registration, filing returns, offering tax planning advice, ensuring proper documentation, and keeping businesses updated on regulatory changes. They also assist with transfer pricing compliance, helping companies minimize tax liabilities and avoid penalties.

The UAE’s corporate tax regime will enforce the OECD's global minimum tax rate for large multinationals with global revenues exceeding EUR 750 million (approximately AED 3.15 billion) as part of the Base Erosion and Profit Shifting (BEPS) framework.

Yes, free zone businesses are subject to the corporate tax regime. However, those that do not operate in the mainland and meet regulatory compliance requirements may continue to enjoy certain tax incentives.

Taxable income is the net profit of a business as reported in its financial statements, after accounting for allowable deductions. Specific inclusions and exclusions will be outlined once the final legislation is released.

No, businesses are not required to pay taxes in advance. However, they must file an annual electronic corporate tax return based on their financial year.

Transfer pricing refers to the pricing of goods, services, or intellectual property exchanged between entities within the same multinational group. It is important to ensure compliance with tax regulations, maintain transparency, and minimize risks of tax avoidance by adhering to the arm’s length principle.

UAE businesses must comply with OECD Transfer Pricing Guidelines, ensuring that prices for intercompany transactions are set in line with what independent parties would charge. This includes maintaining proper documentation to substantiate transfer pricing practices in case of tax audits.

Proper transfer pricing documentation helps businesses comply with local tax laws, provides transparency for tax authorities, and serves as defense during audits. It also mitigates the risks of tax penalties, ensuring that intercompany transactions are aligned with international standards.