Who has to register for Corporate Tax in UAE?
Corporate Tax in the UAE applies to various corporate entities and freelancers conducting business from UAE. The following categories of “Taxable Persons” are subject to Corporate Tax:
1. UAE companies and other juridical persons incorporated or effectively managed and controlled within the UAE.
2. Natural persons (individuals) engaged in Business or Business Activities in the UAE, as specified in an upcoming Cabinet Decision.
3. Non-resident juridical persons (foreign legal entities) with a Permanent Establishment in the UAE.
Additionally, juridical persons established in UAE Free Zones are considered “Taxable Persons” and must comply with the Corporate Tax Law. However, a Free Zone Person meeting the conditions to be a Qualifying Free Zone Person can enjoy a 0% Corporate Tax rate on their Qualifying Income.
Non-resident persons without a Permanent Establishment in the UAE or earning UAE-sourced income unrelated to their Permanent Establishment may be subject to Withholding Tax at a rate of 0%. Withholding Tax is a type of Corporate Tax collected at the source by the payer on behalf of the income recipient. It typically applies to cross-border payments of dividends, interest, royalties, and other forms of income.
What are the Qualifying criteria for a Free Zone Company to be qualified as a qualifying Free Zone Person...?
A Free Zone Person can be considered a Qualifying Free Zone Person under certain conditions to avail the benefit of a 0% Corporate Tax rate on their “Qualifying Income”. These conditions include:
1. Maintaining adequate substance in the UAE.
2. Generating “Qualifying Income.”
3. Not having elected to be subject to Corporate Tax at the standard rates.
4. Complying with the transfer pricing requirements stated in the Corporate Tax Law.
The Minister has the authority to establish additional conditions that a Qualifying Free Zone Person must fulfill.
If a Qualifying Free Zone Person fails to meet any of these conditions or chooses to be subject to the regular Corporate Tax regime, they will be subject to the standard Corporate Tax rates starting from the Tax Period in which they failed to meet the conditions.
What are the Corporate Tax Rates and Thresholds ?
Corporate Tax will be imposed at a standard rate of 9% on Taxable Income surpassing AED 375,000. However, Taxable Income below this threshold will attract a Corporate Tax rate of 0%. Tax on Taxable Income
