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What is Corporate Tax?

It is a tax levied by the Federal Government on Corporations and businesses @ 9% on the profits earned (after considering all the eligible expenses, reliefs and exemptions) during the tax period. Corporate Tax is applicable from the Financial Years commencing on or after 1st July 2023.

Whom is it applicable?

Corporate Tax is applicable to all the corporate entities i.e., LLCs, Free Zone Companies, partnerships and Natural person who is conducting a business. All the Taxable persons and in few cases, Exempt Person, are required to get registered in the EMARATAX Portal irrespective whether they are liable to pay tax.

Are there any Reliefs / Exemptions available?

The Corporate Tax law provides multiple reliefs such as Small business relief (applicable if turnover does not exceed AED 3 million), transfer within the group, Business restructuring relief and exemption to Free Zone entities on Qualifying Income, dividends & profit distribution, participation exemption, Income of Foreign Permanent Establishment and income from operating ships or aircrafts.

What are the deadlines?

The first Tax Period for the companies following Calendar Year as accounting year commences from 1st January 2024. The First Corporate tax return for such companies shall be due on 30th September 2025.

What you should do?

It is essential that you operate with a tax efficient structure to minimise your tax outgo in regulatory compliant manner. Given that the First tax period commences on 1st January 2024, evaluation for tax structure that optimizes your tax outgo and implementing the changes, if required before this date is a must. The law also provides options to the companies for various aspects such as transitional provisions for first tax period, taxation for fair valuation of certain assets, etc. The same should be evaluated first hand so that an informed decision on the same can be made.

How Suntech can help you?

We at Suntech can handhold you through the A to Z of the corporate tax structuring and compliance right from planning for tax optimum structure till filing of Tax Returns and assessments and any other activity related to corporate tax.

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