Government Entities – Exceptions (Article 5) (automatic exemption)
It conducts a Business or Business Activity under a License issued by a Licensing Authority.
Under a Licence issued by a Licensing Authority, it shall be treated as an independent Business, and shall keep financial statements for this Business separately from the Government Entity’s other activities.
It shall calculate the Taxable Income for its Business or Business Activity independently for each Tax Period, in accordance with the provisions of this Decree-Law.
Transactions between the Business or Business Activity this Article and the other activities of the Government Entity shall be considered Related Party transactions subject to the provisions of Article 34 of this Decree-Law.
It may apply to the Authority for all its Businesses and Business Activities to be treated as a single Taxable Person for the purposes of this Decree Law
Government Controlled Entities that are specified in a Cabinet Decision – Exceptions (Article 6) (automatic exemption)
It conducts a Business or Business Activity under a License issued by a Licensing Authority.
Under a Licence issued by a Licensing Authority, it shall be treated as an independent Business, and shall keep financial statements for this Business separately from the Government Entity’s other activities.
It shall calculate the Taxable Income for its Business or Business Activity independently for each Tax Period, in accordance with the provisions of this Decree-Law.
Transactions between the Business or Business Activity this Article and the other activities of the Government Entity shall be considered Related Party transactions subject to the provisions of Article 34 of this Decree-Law.
It may apply to the Authority for all its Businesses and Business Activities to be treated as a single Taxable Person for the purposes of this Decree Law
Extractive Business – CONDITIONS (Article 7)
a. The Person directly or indirectly holds or has an interest in a right, concession or Licence issued by a Local Government to undertake its Extractive Business. b. The Person is effectively subject to tax under the applicable legislation of an Emirate in accordance with the provisions of Clause 6 of this Article. c. The Person has made a notification to the Ministry in the form and manner agreed with the Local Government.
a. The Person directly or indirectly holds or has an interest in a right, concession Licence issued by a Local Government to undertake its Non-Extractive Natural Resource Business in the State. b. The Person’s income from its Non-Extractive Natural Resource Business is derived solely from Persons that undertake a Business or Business Activity. c. The Person is effectively subject to tax under the applicable legislation of an Emirate d. The Person has made a notification to the Ministry in the form and manner agreed with the Local Government.
Non-Extractive Business – CT Application (Article 8)
Qualifying Public Benefit Entity Listed in the Cabinet Decision–(Article 9)
Qualifying Investment Fund –(Conditions: Article 10)
a. The investment fund/fund’s manager is subject to the regulatory oversight of a competent authority; b. Interests in the investment fund are traded on a Recognized Stock Exchange or are marketed and made available sufficiently widely to investors. c. The main or principal purpose of the investment fund is not to avoid Corporate
Qualifying Free Zone Person–(Conditions: Article 18)
a. Maintain adequate substance b. Derives Qualifying Income c. No election to be subject to 9% d. Meets Transfer Pricing requirements e. Comply with Related party transaction rules
Qualifying Free Zone Person–(Election: Article 19)
Can make an election to be subject to Corporate Tax at 9% The election will be effective from:
The commencement of the Tax Period in which the election is made or
The commencement of the Tax Period following the Tax Period in which the election was made.
Contact us at@ +971 45 570 204 / Email Us :[emailprotected], and one of our Corporate tax specialists will provide you with necessary support and consultation.
FAQ
What income is exempt?
The Corporate Tax Law also exempts certain types of income from Corporate Tax. This means that a Taxable Persons will not be subject to Corporate Tax on such income and cannot claim a deduction for any related expenditure. Taxable Persons who earn exempt income will remain subject to Corporate Tax on their Taxable Income. The main purpose of certain income being exempt from Corporate Tax is to prevent double taxation on certain types of income. Specifically, dividends and capital gains earned from domestic and foreign shareholdings will generally be exempt from Corporate Tax. Furthermore, a Resident Person can elect, subject to certain conditions, to not take into account income from a foreign Permanent Establishment for UAE Corporate Tax purposes.
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Businesses engaged in the extraction of natural resources are exempt from CT as these businesses will remain subject to the current Emirate level corporate taxation. Dividends and capital gains earned by a UAE business from its qualifying shareholdings will be exempt from CT.
A taxable person shall be either a resident or non-resident person: Resident person: A resident person is a juridical person incorporated/established/recognised in the state, including a free zone person, or of a foreign jurisdiction that is effectively managed and controlled in the state.
Corporate Tax will affect the businesses in the free zones of the UAE. However, the free zone businesses adhering to the regulatory requirements and not conducting business in the Mainland UAE would enjoy the corporate tax benefits. UAE Free Zones are required to register themselves and file corporate returns.
Corporate tax (CT) is a form of direct tax levied on the net income or profit of corporations and other entities from their business. Corporate Tax is sometimes also referred to as “Corporate Income Tax (CIT)” or “Business Profits Tax” in other jurisdictions.
The Federal Tax Authority has left no room for ambiguity – all businesses operating in the UAE are obligated to register for corporate tax in 2024. This directive extends to enterprises, irrespective of their profitability or the duration of their establishment.
Any income derived by a Qualifying Free Zone Person that is subject to a 0% Corporate Tax Rate is Qualifying Income. The Qualifying Income is derived/determined by qualifying business activity or transaction conducted within the Qualifying Free Zone.
The UAE does not levy a tax on income. There is, therefore, no need for an income tax return in the UAE as there is no applicable individual tax within the country. The same also applies to freelancers and self-employed workers who are residents of the Emirates.
LLCs are permitted to conduct business both within and outside the UAE. In contrast, an FZE allows 100% foreign ownership, operates within the free zones, and can repatriate profits and capital.
A Qualifying Free Zone Person (QFZP) is a free zone company in the UAE that is eligible for a 0% corporate tax rate on its Qualifying Income. To qualify as a QFZP, a free zone company must meet the following conditions: It must be registered with a free zone authority in the UAE.
Connecticut has a graduated individual income tax, with rates ranging from 3.00 percent to 6.99 percent. Connecticut also has a 7.50 percent corporate income tax rate. Connecticut has a 6.35 percent state sales tax rate and levies no local sales taxes.
Is Dubai a tax-free country? Yes, Dubai is a tax-free nation when it comes to imposing income tax on most of its citizens. However, if you own an oil business, there is a tax rate of 55%. There are entertainment taxes and import duties.
The Ministry stated that an administrative penalty of AED10,000 for late registration of UAE Corporate Tax will be imposed on businesses that do not submit their Corporate Tax registration applications within the timelines specified by the Federal Tax Authority.
It is mandatory for businesses to register for VAT in the following two cases: If the taxable supplies and imports of a UAE-based business exceed AED 375,000 per annum.
According to Article 4 of Cabinet Decision No. 85/2022, natural persons are considered Tax Residents if: Habitual or Primary Residence: If a natural person's main home and the place where they handle financial matters are in the UAE, meeting conditions specified by the Minister.
UAE group entities may elect to form a tax group provided all the following conditions are met: The parent company, which must be UAE tax resident, directly or indirectly holds at least 95% of the (i) share capital, (ii) voting rights, and (iii) entitlement to profits and net assets.
Free Zone Person (FZP): The definition of a Free Zone Person under the UAE CT Law refers to juridical person incorporated, established or otherwise registered in a Free zone including branch of a NonResident Person registered in a Free Zone and branch of mainland entity in a free zone.
A Qualifying Free Zone Person (QFZP) is a free zone company in the UAE that is eligible for a 0% corporate tax rate on its Qualifying Income. To qualify as a QFZP, a free zone company must meet the following conditions: It must be registered with a free zone authority in the UAE.
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