- March 12, 2025
- 5:29 pm
Introduction
What is Corporate Tax in the UAE?
The introduction of corporate tax in the UAE has significantly impacted businesses across various sectors. As of June 1, 2023, companies operating in the UAE are subject to a 9% corporate tax on their profits exceeding AED 375,000. While this move aims to align the UAE with international tax standards, many businesses are still navigating the complexities of tax compliance.
In this article, we’ll break down the key aspects of corporate tax in the UAE and how your business can ensure full compliance while minimizing tax liabilities.
Corporate tax is a direct tax imposed on the net profits of businesses. In the UAE, the corporate tax rate has been set at 9% for businesses generating profits exceeding AED 375,000 per year. Businesses with profits below this threshold are exempt from paying corporate tax.
Who Needs to Pay Corporate Tax?
The following businesses are subject to corporate tax in the UAE 1. Mainland Companies: All companies operating in the mainland with taxable income above AED 375,000. 2. Foreign Companies: If the company generates income from the UAE, it may be subject to corporate tax. 3. Free Zone Companies: While Free Zone companies enjoy a 0% corporate tax rate, they must still comply with regulatory reporting and economic substance requirements.
Exemptions from Corporate Tax
Certain businesses and sectors are exempt from corporate tax, including: • Government Entities • Charitable Organizations • Public Benefit Institutions • Extractive Businesses (Oil & Gas)
How Can Your Business Minimize Corporate Tax?
1. Strategic Expense Management: Keep a detailed record of your business expenses to reduce your taxable income. 2. Tax Planning & Forecasting: Work with a professional tax consultant to create a tax-efficient business structure. 3. Transfer Pricing Compliance: If your business has international transactions, ensure you comply with transfer pricing regulations. 4. Proper Bookkeeping: Maintain accurate and compliant financial records to avoid penalties.
How Can SQS Help You?
At SQS Accounting and Financial Services LLC, we specialize in helping businesses navigate the complexities of corporate tax compliance. Our services include: • Corporate Tax Registration & Filing • Tax Planning & Minimization Strategies • Transfer Pricing Compliance • Annual Financial Statement Preparation
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Need Assistance with Corporate Tax?
Contact our team today for a free consultation. We’ll ensure your business remains compliant while minimizing tax liabilities.