Common Things To Know!
A corporate tax is a form of direct tax levied on a company net income or profit. Alternatively known as Corporate Income Tax or the Business Profits Tax. Simply, it is a tax on business profits. Companies are required to pay a certain percentage of profits as tax.
The corporate tax applies to businesses with taxable profits (net) over 375,000 AED, and a certain amount of the profits must be paid as tax. Individuals engaged in business will be subject to corporate tax and registration requirements only if their combined turnover exceeds Dh1 million in a calendar year.
The date of implementing corporate tax is effective from the financial year starting on or after 1st June 2023.
Dubai adopted a detailed and extensive corporate regime to bolster its global positioning as a hub for investment and startup innovation, with affordable registration costs and no corporate taxes.
The Small Business Relief is a new ministerial decision for businesses with revenues under AED 3 million.Residents who have revenues under AED3 million during the respective tax year and previous tax periods are eligible to apply for Small Business Relief. Once the revenue threshold is exceeded, the Small Business Relief is no longer available.
An assessment year follows a financial year. The assessment and taxation of income earned during FY occur at this time. Assessment Year and Financial Year start on Jan 1 and close on Dec 31.As of UAE Corporate Tax June 1, If your financial year runs from January to December 2023, your FY access will run from January to December 2024, and compliance must be met by September 2025 after the grace period.But in case, If your financial year runs from July 2023 to June 2024, then your FY access will also run from July 2023 to June 2024, and after the grace period, compliance must be met by March 2025
Under the new decision, individuals residing in the UAE who operate businesses and generate combined annual profits exceeding Dh1 million will have to pay corporate taxes on their income.
For individuals and juridical persons, 9 percent applies on taxable income exceeding AED 375,000 & for Taxable income up to AED 375,000, the tax rate is 0 percent.
Qualifying Free Zone Residents, 9 percent applies on taxable income that does not meet the qualifying income definition. The Qualifying Free Zone Persons with Qualifying income, the tax rate is zero
