Impending corporate tax keeps business setup UAE firm busy

Corporates in the UAE are bracing up for a paradigm shift in terms of taxation and it is a welcome but complicated development, according to one of the expert firms in the region.

Robin Philip, founder at A&A Associate, said: "A UAE decree has announced the onset of corporate tax at a headline rate of nine percent will be levied on businesses with income of over Dh375,000 on or after June 1, 2023, additionally as per the latest update, The UAE Ministry of Finance has issued a new ministerial decision for businesses with revenues of Dh3 million or less, wherein they can claim a Small Business Relief.

“The nine per cent rate is very attractive and quite competitive when you compare it to the very high rates in the world which are around 25-30 per cent. On the other hand, the framework for the law is still being built and there is much to work upon given the types of business entities and financial development authorities prevalent in the UAE compared to the world. Currently, only big corporate and public joint stock companies have received the invitation to register for filings of corporate tax through the EmaraTax platform. “Even in that, most of the finer details are being processed with each passing day of changes and approvals. The situation is developing. The good part is that we are equipped at A&A Associate to deal with different situations given the range of expertise of our staff from major corners of the world,” Philip added.

A staggered approach to registering for the UAE’s Corporate Tax programme offers more time for mid and small businesses to get their processes in order. An early registration period will continue until May and A&A Associate has reminded that the early beeline is only for certain categories of businesses who will be notified by an invite.

Sandeep Anand, general manager at A&A Associate and in-house CT expert, said: "Registration for others will be announced in due course, but many of our clients are spending time with us to double-confirm things. Our team of experts are also compiling a list of frequently asked questions in the meantime. At the same time, it gives the tax authorities to fine-tune all of the related processes before the implementation date for the Corporate Tax from June 2023. The requirements on corporate tax registration is quite different since entities can be either mainland, free zone or offshore business companies. Within the free zone also, there are normal and special categories depending on the activity of the business. Both individuals and companies must apply according to the timelines."

There is no penalty yet for late registrations. Businesses need to register at least before the due date for tax return submissions. The deadline for filing the tax returns and paying is nine months after the taxpayer’s year-end. Registration is also required even if the tax payer’s income is exempt or below the threshold of Dh375,000 per annum. However, there is no de-registration like Value Added Tax (VAT).

A&A Associate is a leading Dubai business setup company and the only such firm that houses chartered accountants, lawyers, and consultants providing a wide range of legal, auditing, accounting and management consulting solutions, designed to meet different business one needs through a single window.

Visit www.aaconsultancy.ae/ if you are someone looking to set up a new business anywhere in the UAE and need help.

• KT Network