#Income Tax in UAE for Foreigners

[theprivatewolf]

Taxes In UAE For Foreigners: Everything You Need To Know

The United Arab Emirates (UAE) is known for its dynamic business environment, luxurious lifestyle, and tax advantages. For foreigners looking to work, invest, or set up businesses in the UAE, understanding the country’s tax system is crucial. In this guide, we will explore the ins and outs of taxes in the UAE for foreigners.

Basic Overview of the UAE Tax System

The UAE operates on a territorial tax system, which means that taxes are imposed only on activities that occur within the country’s borders. This tax system has several key components:

No Personal Income Tax: Individuals in the UAE, including foreigners, are not subject to personal income tax. This is a significant advantage for expatriates.

No Capital Gains Tax: There is no tax on capital gains in the UAE, making it an attractive destination for investors.

No Inheritance Tax: The UAE does not impose inheritance tax on the transfer of assets upon a person’s demise.

Income Tax in UAE for Foreigners

As mentioned, there is no personal income tax for individuals in the UAE. This means that foreign workers can enjoy their earnings without the burden of income tax deductions, allowing them to save more of their income.

VAT in UAE

The UAE introduced Value Added Tax (VAT) in 2018. Currently set at 5%, VAT applies to most goods and services, but there are several exceptions, including essential food items, healthcare services, and education. Businesses with an annual turnover exceeding the mandatory threshold must register for VAT.

Other Indirect Taxes Foreigners Should Be Aware Of

In addition to VAT, the UAE imposes excise taxes on specific goods, such as tobacco products and sugary drinks. Understanding these taxes is essential, as they can significantly affect the cost of certain items.

Tax Obligations for Foreign Companies

Foreign companies operating in the UAE should be aware of the following tax obligations:

Corporate Income Tax: As of now, the UAE does not impose corporate income tax on businesses, which is advantageous for foreign companies operating in the country.

Withholding Tax: The UAE generally does not impose withholding tax on dividends, interest, or royalties, but it’s essential to review the specifics of tax treaties between the UAE and your home country.

Tax-Free Zones for Foreign Businesses

The UAE offers various free zones designed to attract foreign investment. Companies registered in these zones can benefit from 100% foreign ownership, no import or export duties, and no personal income tax for employees. Some of the popular free zones include Dubai Multi Commodities Centre (DMCC), Jebel Ali Free Zone (JAFZA), and Abu Dhabi Global Market (ADGM).

Navigating the UAE Tax Landscape

Navigating the UAE tax landscape can be complex, especially for foreign businesses and investors. It’s advisable to seek professional guidance from tax advisors and consultants who are well-versed in UAE tax regulations. This will help ensure that you comply with all obligations and take full advantage of the tax benefits the UAE has to offer.

In summary, the UAE’s tax system is highly favorable for foreigners. With no personal income tax, a reasonable VAT rate, and numerous tax-free zones, it’s a prime destination for expatriates, entrepreneurs, and investors looking to make the most of their earnings and business opportunities. However, staying informed about tax regulations and consulting experts is essential to make the most of the UAE’s tax advantages.

M.Hussnain

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[nordholm]

Best Expert Tax Services in Dubai for Investor Success - Nordholm

Welcome to Nordholm Accounting and Bookkeeping Services, a subsidiary managed by Swiss entity Nordholm Investments, dedicated to guiding investors through the intricate landscape of business growth in the UAE, particularly concerning Tax Services in Dubai. Our suite of services encompasses the entire gamut of business establishment, visa processing, bank account setup, HR solutions, payroll management, VAT compliance, and comprehensive accounting services.

Navigating Dubai's intricate business environment necessitates meticulous attention to tax compliance and accurate financial records. Entrusting these critical tasks to seasoned professionals is essential for seamless operations while ensuring strict adherence to diverse tax regulations.

Our range of Tax Services in Dubai includes comprehensive assistance in various areas:

Corporate Tax Advisory: Although Dubai imposes no corporate or income taxes on individuals and corporations, specific considerations apply to branches of foreign entities. Our experts offer strategic guidance, ensuring compliance with applicable regulations and optimizing financial strategies within this unique tax framework.

VAT Compliance Expertise: Operating under a Value Added Tax (VAT) system, Dubai mandates compliance with VAT regulations. Our specialized services assist businesses in Navigating VAT intricacies, timely filing of returns, and implementing strategies to effectively manage VAT liabilities.

Navigating Customs Duties: For businesses involved in importing or exporting goods, understanding and adhering to customs duties are critical. Our services encompass navigating customs regulations, duty exemptions, and ensuring meticulous documentation to mitigate duty-related risks.

Expertise in Excise Taxes: Dubai imposes excise taxes on specific goods like tobacco, sugary drinks, and energy drinks. Our services aid businesses in understanding, reporting, and complying with these taxes, ensuring adherence to statutory requirements.

Tailored Industry-Specific Tax Guidance: Certain industries in Dubai might face specific taxes or levies. We provide tailored guidance to ensure compliance with industry-specific tax obligations, such as tourism-related taxes or real estate-related fees.

At Nordholm Accounting and Bookkeeping Services, we're committed to providing comprehensive support for investors navigating Dubai's multifaceted business landscape, especially regarding Tax Services. Partner with us for expert guidance, ensuring compliance and strategic positioning for sustainable growth in this dynamic market.

[shapoorjiproperties]

UAE Corporate Tax and Property Investments: Are Owners Accountable to File Taxes?

As the UAE ushers in its first form of taxation - the Corporate Tax 2023 - there’s been a surge in queries online. Among the many questions, the one that was asked most frequently was: Who must adhere to mandatory tax filing, and who is exempt from this financial threshold? 

To put an end to these uncertainties, a beacon of clarity came from the Ministry of Finance through a decisive cabinet decision. This landmark decision delineates the regulations governing foreign corporations and non-resident property owners, be it in Dubai or anywhere else in the country.

The UAE Ministry of Finance has taken a carefully thought-out step by introducing Cabinet Decision No. 56 of 2023. This decision sets new rules for foreign companies and non-residents, making them answerable to the new Corporate Tax in the UAE. What it means is that these entities now have to pay taxes on the money they make from real estate and other property investments in the UAE.

To navigate this situation, these companies need to start working with the UAE's regulatory authorities. Given that this rule applies to properties used for business and investment within the UAE. Recent information from the Ministry of Finance says that foreign companies (or property developers in UAE) owning property in the country must pay Corporate Tax based on their income after deducting expenses.

However, there's a positive side to these tax rules. Businesses affected by this tax can subtract relevant expenses that match the rules outlined in the Corporate Tax law. This smart calculation of deductions lowers the amount of income that gets taxed, which helps ease the financial load.

For people in situations where they are foreigners living in another country or who live in the UAE. If they own a real estate property, like a building, regardless if they’ve bought it themselves or through special arrangements, they usually wouldn’t have to pay a special tax on the money they make from it. But this special tax exemption doesn't apply anymore if they do certain kinds of business activities specified in the Cabinet Decision.

In a similar way, there's another situation where real estate investment trusts and certain investment funds can make their mark. They can avoid paying Corporate Tax on income from UAE's properties if they follow specific rules and conditions.

Younis Haji Al Khoori, the undersecretary of the Ministry of Finance, whose declarations echo global wisdom, elucidates, "The Corporate Tax treatment of income derived from UAE real estate and other immovable property by foreign juridical persons is in line with international best practice," further reinforcing the tenet that income tied up with immovable property should be up for taxation within the sovereign grounds which hosts the said property.

His strong message echoes deeply. The UAE's Corporate Tax Law cleverly combines elements that follow international tax rules, carefully designed to create fairness, ensuring a balanced situation for local and foreign companies dealing with property income in the UAE.

Summary

In summary, the symphony of this paradigm shift composes a melody of equity woven through the tapestry of Corporate Tax. As the sands of Dubai bear witness, this arrangement aligns itself with global conventions, creating an environment where enterprises, irrespective of their origin, will stand on equal footing.

[markef-consulting]

What is a Tax Residency Certificate in UAE?

What is TAX Residency Certificate

The Tax Residency Certificate (TRC) is a certificate issued for eligible government entities, companies, and individuals. The document proves that you pay taxes to a certain country and gives you the right to benefit from double taxation avoidance agreements. In the UAE, Federal Tax Authority (FTA) is responsible for issuing the certificate of tax residence and you can get a certificate issued to a company registered in the UAE as well as for individuals residing in the UAE.

Who Needs a Tax Residency Certificate in UAE?

Any company operating on the mainland or in a Free Zone that has been active in the UAE for at least a year is eligible for The Tax Residency Certificate. However, Offshore companies are ineligible for this and must receive a tax exemption certificate instead of the Tax Residency Certificate. Also, individuals who have resided in the UAE for at least 180 days are eligible for The Tax Residency Certificate. This is especially beneficial for individuals whose mother countries do not have a double taxation agreement with the UAE, the individuals must have a valid UAE resident visa for more than 180 days to apply.

Benefits of a Tax Residency Certificate

Avail of tax benefits associated with Double Taxation Avoidance Agreements.

Helps avoid having to pay higher taxes, enabling you to save on valuable resources.

In case you are a part of the CRS group of nations, the TRC helps with maintaining compliance.

Allows you to claim excess taxes paid.

Protects the national economy by ensuring fairness for both taxpayers and the government.

Builds credibility and transparency for the company involved.

Proves residency in the UAE, helping establish authenticity.

How to Obtain a Tax Residency Certificate in UAE

Create an account on the payable to the UAE Federal Tax Authority portal

Complete the application form

Upload the required documents in PDF or JPEG format

Your application and attached documents will be verified and if they meet the criteria, you’ll receive a confirmation email to pay the remaining fees via the system

After payment confirmation, you’ll receive the certificate via an express courier

Documents Required for Companies

Valid UAE Trade License, active for over 1 year in (Mainland DED or Freezone)

A copy of the Memorandum of Association of the company

A copy of the Certificate of Incumbency for the company (normally the Chamber of Commerce certificate)

The company organizational structure chart

A copy or a title deed of a certified commercial tenancy contract (valid for at least three months prior to application) with a physical office space as virtual office space will not be accepted

A copy of a valid passport and a valid UAE resident visa

A copy of Emirates ID of the company directors, shareholders, or managers

Latest certified audited financial statement or UAE company bank statements from the last 6 months, stamped by the UAE bank

Tax Residency Certificate application fees are AED 10,000, payable to the UAE Federal Tax Authority through the e-Dirham Card

Documents Required for Individual

A passport copy and a valid visa copy are issued at least 180 days prior to the application

An Emirates ID copy

6 months of personal UAE bank statements, stamped by the UAE bank

Proof of income in UAE such as an employment agreement, share certificate, or salary certificate

A report from the General Directorate of Residency and Foreign Affairs shows evidence of all entries into and exits from the UAE

A copy or a title deed of the certified tenancy contract valid for at least three months prior to application

Tax Domicile Certificate application fees are AED 2000, payable to the UAE Federal Tax Authority through the e-Dirham Card

Tax Residency Certificate Application Process

First and foremost, you need to ensure that you or your company meets the eligibility criteria mentioned above.

In case you do qualify, you can approach the Ministry of Finance. Visit official portal, and from the homepage, you should navigate to the Application section.

From there, you must fill out the form for the Tax Residency Certificate and submit the same after careful verification.

Also, you must be ready to submit all the supporting documents required, and you can upload the same through the portal.

The Ministry of Finance will then conduct an extensive review of your documents and application, which may take anywhere between 2 to 4 weeks.

Furthermore, you must also complete the payment of the required fees through the payment methods listed on the website.

After successful verification, the Tax Residency Certificate will be made available to you.

The Tax Residency Certificate is an important document for expats living in the UAE. It certifies an individual’s tax residency status in the country and offers several benefits, including the avoidance of double taxation and access to banking and government services. To apply for the TRC, individuals must meet the eligibility criteria and MARKEF can be complete all the process to obtain TRC  within a few weeks. If you’re an expat living in the UAE, consider applying for the TRC to take advantage of its benefits and simplify your tax filing process.

Get Your TAX Residency Certificate

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Everything You Need to Know About Corporate Tax in UAE

Corporate tax is an essential aspect of running a business in the UAE. With its favorable tax laws and a favorable business environment, the UAE has become a hub for foreign investors. It makes it crucial to have a deep understanding and read the information on the corporate tax system in the UAE, in order to make the most of its benefits. This article will help you understand corporate tax in the UAE by explaining rules, regulations and its benefits in the UAE.

Introduction to Corporate Tax in UAE

There is no personal income tax in the UAE, because of which UAE has a tax-free environment, making it an attractive country to live in for most people. However, corporations are subject to corporate tax on their income earned in the UAE. The introduction of CT in this region was intended to help UAE with the transformation and development that the government has strategically planned to achieve. The country’s tax laws are enforced and implemented by The UAE Federal Tax Authority (FTA). The authority also provides guidelines and regulations for corporations and businesses operating in the UAE. Corporations need to be abiding by these laws and regulations to avoid getting penalized.

The Corporate Tax Law in the UAE

The corporate tax law in the UAE is regulated by the Federal Tax Authority, which oversees the implementation and enforcement of the country’s tax laws. The CT law applies to all businesses operating in the UAE, regardless of their size or structure. The tax is levied on a company’s profits, and the rate at which the tax would be at, depends on the type of business and the industry in which it operates.

Corporate Tax Rates in the UAE

The CT rate depends on the type of business and industry that it operates in, hence there is no standard CT rate in UAE. Oil and gas, insurance, and banking are however, some industries that are exempt from CT. The tax rate for other industries ranges from 0% to 55%.

Benefits of Corporate Tax in UAE

The UAE offers several benefits for corporations, including:

No personal income tax

A favorable tax environment for businesses

A stable and predictable tax system

A streamlined process for tax registration and compliance

Access to a large pool of potential customers and investors

Corporate Tax Filing and Compliance in the UAE

It is necessary for corporations operating in the UAE to file their tax returns on an annual basis. The tax returns must be filed with the Federal Tax Authority(FTA) by the end of the financial year. The tax returns must include detailed information on the corporation’s income and expenses, and must be supported by financial statements and other relevant documents.

Common Mistakes to Avoid in Corporate Tax in UAE

To ensure compliance with the CT laws in the UAE, it is important to avoid common mistakes, including:

Not registering for CT

Filing incorrect or incomplete tax returns

Failing to keep accurate financial records

Not seeking professional advice

FAQ

Q: Is there personal income tax in the UAE?

A: No, there is no personal income tax in the UAE.

Q: Who is responsible for implementing and enforcing corporate tax laws in the UAE?

A: CT laws are enforced and implemented by The Federal Tax Authority (FTA) in the UAE.

Q: What is the standard corporate tax rate in the UAE?

A: The rate depends on the type of business and the industry in which it operates. There is no standard ct in the UAE.

[simplysolvedagency]

Everything You Need to Know About Corporate Tax in UAE

Corporate tax is an essential aspect of running a business in the UAE. With its favorable tax laws and a favorable business environment, the UAE has become a hub for foreign investors. It makes it crucial to have a deep understanding and read the information on the corporate tax system in the UAE, in order to make the most of its benefits. This article will help you understand corporate tax in the UAE by explaining rules, regulations and its benefits in the UAE.

Introduction to Corporate Tax in UAE

There is no personal income tax in the UAE, because of which UAE has a tax-free environment, making it an attractive country to live in for most people. However, corporations are subject to corporate tax on their income earned in the UAE. The introduction of CT in this region was intended to help UAE with the transformation and development that the government has strategically planned to achieve. The country’s tax laws are enforced and implemented by The UAE Federal Tax Authority (FTA). The authority also provides guidelines and regulations for corporations and businesses operating in the UAE. Corporations need to be abiding by these laws and regulations to avoid getting penalized.

The Corporate Tax Law in the UAE

The corporate tax law in the UAE is regulated by the Federal Tax Authority, which oversees the implementation and enforcement of the country’s tax laws. The CT law applies to all businesses operating in the UAE, regardless of their size or structure. The tax is levied on a company’s profits, and the rate at which the tax would be at, depends on the type of business and the industry in which it operates.

Corporate Tax Rates in the UAE

The CT rate depends on the type of business and industry that it operates in, hence there is no standard CT rate in UAE. Oil and gas, insurance, and banking are however, some industries that are exempt from CT. The tax rate for other industries ranges from 0% to 55%.

Benefits of Corporate Tax in UAE

The UAE offers several benefits for corporations, including:

No personal income tax

A favorable tax environment for businesses

A stable and predictable tax system

A streamlined process for tax registration and compliance

Access to a large pool of potential customers and investors

Corporate Tax Filing and Compliance in the UAE

It is necessary for corporations operating in the UAE to file their tax returns on an annual basis. The tax returns must be filed with the Federal Tax Authority(FTA) by the end of the financial year. The tax returns must include detailed information on the corporation’s income and expenses, and must be supported by financial statements and other relevant documents.

Common Mistakes to Avoid in Corporate Tax in UAE

To ensure compliance with the CT laws in the UAE, it is important to avoid common mistakes, including:

Not registering for CT

Filing incorrect or incomplete tax returns

Failing to keep accurate financial records

Not seeking professional advice

FAQ

Q: Is there personal income tax in the UAE?

A: No, there is no personal income tax in the UAE.

Q: Who is responsible for implementing and enforcing corporate tax laws in the UAE?

A: CT laws are enforced and implemented by The Federal Tax Authority (FTA) in the UAE.

Q: What is the standard corporate tax rate in the UAE?

A: The rate depends on the type of business and the industry in which it operates. There is no standard ct in the UAE.

[d-realtors]

What Are The Factors I Need To Consider When Buying A Property In Dubai

Thanks to the increased foreign direct investments and free trade agreements between UAE and other countries, Dubai has become one of the most happening cities in the world, especially for the wealthy across the globe.

 Besides free trade, low tax and zero income tax, Dubai is also dubbed as the business hub of the Middle East and enjoys the status as a favorite travel destination. Such features along with political stability and investment in infrastructure significantly boosted the country’s real estate.

 Reportedly, Dubai saw a 76 per cent rise in real estate transactions in 2022 which amounted to a whopping $140 billion, with a majority of buyers from Russia. If you are lured by the lush lifestyle and cheap service from low-wage laborers procured from Asia, Africa and the Middle East, and propelled to buy a property here, here’s how to make a smart purchase and enjoy your slice of the cake.

The Current Trends Of Property Demand In Dubai

While real estate in Dubai is broadly classified on a residential and commercial basis, the former is further classified as villas, apartments, penthouses and working houses or studio apartments that the opulent purchase to house their staff.

The commercial property includes office spaces, trade areas, warehouses, exhibition halls and industrial properties. While the demand for office space is believed to have subsided, the need for warehouses has increased due to enhanced e-commerce developments.

 The huge retail companies and international markets in the Emirates have caused this demand for warehouses and sorting places.

Appreciation For Dubai Property

 The strategic location and accentuating economy add to the appreciation of property value in Dubai. The flawless infrastructure makes any real estate investment fruitful, especially the off-plan ones.

 Through flexible payment plans, off-plan properties have enhanced appreciation since the property price increases as the building nears completion. Likewise, even end users benefit from buying a property at a lower cost with more value for money.

 Buyers can also benefit from various plans provided by promoters like post-handover payment plans and rent-to-own plans to name a few. Early investments offer immense profits through the appreciation perspective.

Allegedly the price of properties which are arriving in the markets here are expected to rise by 25 per cent per year. Demand for villas has superseded those for apartments and despite the shortage of luxury villas, the demand only grows.

 Zeroing In On The Right Property

The buyer must clarify self about the property type, purpose of the purchase, preferred locality and its functionality to satisfy the purpose, amount affordable for purchase, mortgage possibilities and the developer’s reputation to hand over the property in the scheduled time while purchasing the property.

 It is equally important to check the risks involved and estimated ROI on completion of the project.

Timespan Of Occupation

Purchasing a home anywhere across the world, leave alone in Dubai, must be considered on both a short and long-term basis. An apartment purchased by a newlywed or young couple may seem insufficient when the family expands.

Purchasing villas gives the option to expand and redesign besides providing a better return on investments. These villas which are excellently furnished can be sold to one of the increasing numbers of interested buyers if owners choose to relocate to another country.

 Budget

 As of February 2023, the starting price of a property in Dubai is reportedly between AED 3 lakhs to 3.5 lakhs. The price of apartments in Dubai depends upon floor area, locality and amenities among various other factors.

The buyer must be prepared to pay a 10 per cent refundable registration fee while purchasing the desired property.

Location 

The instance found below shows how price varies among localities for almost the same floor area.

 One-bedroom apartments measuring 800 to 900 square feet at Business Bay and Dubai Hills Estate at Mohammed Bin Rasheed are affordable. One-bedroom apartments are also available at Al Wasl (Jumeira), Dubai South City (Jabal Ali) at affordable rates.

 Single-bedroom apartments at Emaar Burj Vista measuring between 700 to 1000 square feet cost more than AED 2,00,000 at Downtown Dubai, Dubai Marina. Proximity to Dubai Mall, Dubai Mall Metro Station and easy connectivity to Sheik Zayed Road and Dubai Property justifies the costly price of this single-bedroom apartment.

The Purchase Medium

A buyer could save a lot of money by avoiding brokers or middlemen while purchasing property in Dubai directly from the owner. Notably, brokers charge a 2 per cent agency fee and a 5 per cent VAT charge on the fee.

However, while avoiding brokers, one forgoes professional assessment of properties and expert navigation of transaction details like the contract paperwork, for instance, the art of negotiating.

Dubai Land Department Service Charges

Dubai Land Department service charges, which are mandatory while purchasing property in Dubai, may be shared equally by the buyer and seller or might be entirely paid by the buyer. The DLD charges amount to 4 percent of the property value.

Additionally, the buyer may need to pay a mortgage registration fee if bought through a loan, which amounts to 0.25 per cent of the loan along with AED 290. If the DLD is not paid within 60 days, the purchase is understood to be canceled.

Property Service Charges

The property service charges which are calculated on a square foot basis may range between AED 3 to 30. Besides property service charges one must foot Dubai Electricity and Water Authority fees along with insurance fees, security deposit and property transfer fees.

The property service charge varies along with locations, project type and purchase purpose. The buyer should also pay a ‘sinking fund’ which is a reserve fund that meets expenses for major repairs in future. Interestingly the 10 to 15 per cent price drop in key locations of Dubai facilitates developers selling to new end users.

While places like International City, Discovery Gardens have low service charges at 7 Dirhams per square feet (psf), Business Bay, Dubai Marina, Jumeirah Lakes Towers, Sports City, Jumeirah Village Circle charge moderately at 10 Dirhams psf.

Arabian Ranches 1 and 2 require AED 0.89 psf and 2.44 psf respectively while Burj Vista property owners shell out a massive AED 17.44 psf for property services.

 Amenities And Their Scalability, Effectiveness And Quality

Villas are equipped with clubhouses, gyms and modern equipment and are tagged with excellent resale value. Villas in Dubai Hills, Arabian Ranches, Palm Jumeirah, Emirates Hills, Damac Hills and Al Furjan are sought for 18-hole golf course plus proximity to the city, connectivity to Sheik Mohammed Bin Zayed Road, Waterfront view, Privacy with palatial layout, family-friendly atmosphere and proximity to Expo 2020 site in the same order.

Handling Installments

Installment plans are popular in Dubai real estate purchases. 10 percent of the total cost is paid as advance which is followed by installments that cover half the entire cost at the time of handover.

 Documents Required

Copies of documents including Emirates ID, passport, Visa page, reservation form, Sales and Purchase Agreement and Mortgage Contract if applicable required while purchasing property in Dubai.

Check Developer Background

It pays to check the developer’s track records before approaching them to buy property. If the developer lacks dedication, his property abounds in unsatisfactory plans and poor finishes while laying tiles, cupboards and walls.

Where To Purchase Off-Plan Properties

Purchasing a property through D Realtors, a professional and authentic real estate player in Dubai, fetches access to the functionally and aesthetically best property in Dubai which is spread across in prestigious locations such as Mohammed Bin Rashid City, The Fields, Burj Khalifa district and Sheik Zayed Road to name a few.

Final Words

The decision to join the game cannot be delayed too much since the prospects have already caught the eyes of many. Waste no time in deciding to take the plunge because the competition is already in the news.

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[thebroadspectrum]

Understanding the Economic Substance Regulation in Dubai, UAE: Insights from Leading Consultants

In recent years, the United Arab Emirates (UAE) has implemented several regulatory measures to align its economic policies with international standards. One such measure is the Economic Substance Regulation (ESR), which has profound implications for businesses operating in the region. This article delves into the nuances of the Economic Substance Regulation in Dubai, UAE, and highlights the pivotal role of consultants in navigating this regulatory landscape.

Click https://highmarkaccountants.com/compliance/economic-substance-regulationsers-services-in-uae/

The Genesis of Economic Substance Regulation

The Economic Substance Regulation was introduced in the UAE in 2019, in response to the European Union's concerns regarding the lack of economic substance requirements in jurisdictions with no or nominal taxes. The ESR aims to ensure that entities undertaking certain activities in the UAE have substantial activities and real economic presence in the region, rather than being used to artificially attract profits that do not reflect economic activity.

Key Components of the Economic Substance Regulation

The ESR applies to all UAE onshore and free zone companies that carry out relevant activities. These activities include:

Banking

Insurance

Investment fund management

Lease-finance

Headquarters

Shipping

Holding company

Intellectual property (IP)

Distribution and service centers

Entities engaged in these activities must meet specific substance requirements. They need to demonstrate that they are directed and managed in the UAE, conduct core income-generating activities (CIGA) within the UAE, and have an adequate number of qualified employees, incur adequate expenditure, and have adequate physical assets in the UAE.

Compliance and Reporting

Compliance with the ESR involves several steps:

Notification: Entities must notify the relevant regulatory authority of their activities.

Economic Substance Test: Entities must meet the economic substance requirements for their activities.

Annual Reporting: Entities must file an annual report demonstrating their compliance with the ESR.

Non-compliance can lead to significant penalties, including financial fines, exchange of information with foreign tax authorities, and potential suspension or non-renewal of the business license.

The Role of Consultants in Navigating ESR Compliance

Given the complexity and importance of the ESR, businesses often seek the expertise of specialized consultants in the UAE. These consultants play a crucial role in ensuring that entities understand and meet the regulatory requirements. Here’s how consultants add value:

Expert Guidance: Consultants possess in-depth knowledge of the ESR and stay updated with any changes or updates to the regulations. They provide expert guidance tailored to the specific needs of each business.

Risk Assessment: Consultants conduct thorough assessments to determine whether a business falls within the scope of the ESR and identify any compliance gaps that need to be addressed.

Documentation and Reporting: Consultants assist businesses in preparing the necessary documentation and ensure accurate and timely filing of notifications and annual reports. This reduces the risk of non-compliance and associated penalties.

Strategy Development: For businesses needing to enhance their economic substance, consultants help develop and implement strategies to meet the ESR requirements. This includes advising on the relocation of employees, restructuring of operations, and optimizing resources within the UAE.

Case Study: Successful ESR Compliance in Dubai

Consider a multinational corporation with a holding company and intellectual property assets based in Dubai. Faced with the challenge of meeting ESR requirements, the corporation engaged a leading consultancy firm in the UAE. The consultants conducted a comprehensive review of the company’s operations and identified several areas needing improvement.

The consultancy firm recommended relocating key management personnel to Dubai, enhancing local operational capabilities, and ensuring that core income-generating activities were conducted within the UAE. They also assisted in documenting all relevant activities and expenditures, ensuring robust evidence for the annual ESR report.

As a result, the corporation successfully met the ESR requirements, avoided penalties, and maintained its favorable tax position.

The Future of ESR in the UAE

The implementation of the Economic Substance Regulation marks a significant step towards greater transparency and alignment with international tax standards. As global regulatory landscapes continue to evolve, businesses in the UAE must remain vigilant and proactive in maintaining compliance.

Conclusion

The Economic Substance Regulation in Dubai, UAE, represents a critical component of the region’s commitment to international tax standards. For businesses, navigating the complexities of the ESR requires a strategic approach and often the expertise of seasoned consultants. By leveraging the knowledge and experience of consultants in the UAE, businesses can ensure compliance, mitigate risks, and capitalize on the opportunities presented by a robust regulatory framework.

Staying informed and prepared in this dynamic regulatory environment is key to sustainable success. Whether you are a multinational corporation or a local enterprise, understanding and complying with the ESR is essential for maintaining a strong and reputable presence in the UAE.

Click for accounting services in Dubai https://highmarkaccountants.com/

[smartzone43]

Smart Zone: Your Guide to Business Setup in Fujairah

Fujairah, one of the seven emirates of the United Arab Emirates, offers a range of opportunities for entrepreneurs looking to establish their businesses. The emirate’s strategic location, favorable business environment, and robust infrastructure make it an ideal destination for investors. One of the best places for business setup in Fujairah is the Fujairah Creative City Free Zone. In this detailed guide, we will explore everything you need to know about setting up a company in Fujairah and obtaining the necessary licenses.

Why Choose Fujairah for Your Business Setup?

Fujairah’s appeal lies in its strategic location, connecting the Middle East, Asia, and Europe. The emirate offers modern infrastructure, tax exemptions, and 100% foreign ownership in free zones. Moreover, the Fujairah Creative City Free Zone provides a dynamic environment for businesses, especially in media, consulting, and IT sectors.

Understanding the Fujairah Creative City Free Zone

The Fujairah Creative City Free Zone is a hub for businesses in creative and media sectors. This free zone offers numerous advantages, including no corporate or income taxes, full repatriation of profits, and no restrictions on hiring foreign employees. The free zone is designed to foster creativity and innovation, providing state-of-the-art facilities and support services.

Steps to Fujairah Company Set Up

1. Choose Your Business Activity: Before setting up your company, decide on the business activities you plan to undertake. The Fujairah Creative City Free Zone offers various business activities across sectors like media, consulting, and IT.

2. Select a Company Structure: In Fujairah, you can choose between different types of company structures, such as a Free Zone Establishment (FZE) or a Free Zone Company (FZC). Each structure has its own benefits and requirements.

3. Apply for a Business License: To operate legally, you need a Fujairah business license. The type of license depends on your business activity. The Fujairah Creative City Free Zone offers several types of licenses, including commercial, service, and industrial licenses.

4. Submit Required Documents: Prepare and submit the necessary documents, which typically include a business plan, passport copies, and proof of residence. The specific requirements may vary based on the business activity and company structure.

5. Pay the Fees: The cost of obtaining a Fujairah Free Zone trade license cost varies based on the type of license and the business activity. Ensure you budget for these fees, which cover registration, licensing, and other administrative costs.

6. Lease Office Space: Depending on your business needs, you can choose from various office solutions, including shared desks, private offices, and warehouses. The Fujairah Creative City Free Zone provides flexible leasing options to suit different business requirements.

7. Obtain Visas: Once your company is registered, you can apply for UAE residence visas for yourself and your employees. The number of visas you can obtain depends on the size of your office space and the nature of your business.

Fujairah Free Zone License: Types and Costs

The Fujairah Creative City Free Zone offers several types of licenses:

Commercial License: Suitable for trading activities, including import and export.

Service License: Ideal for consultancy and professional services.

Industrial License: For manufacturing and production activities.

The Fujairah Free Zone license cost vary depending on the type of license and the business activity. Generally, the costs include registration fees, license fees, and office rental charges. The competitive pricing makes Fujairah an attractive option for startups and small businesses.

Benefits of Setting Up a Company in Fujairah

1. Tax Exemptions: Businesses in the Fujairah Creative City Free Zone enjoy complete exemptions from corporate and personal income taxes.

2. 100% Foreign Ownership: Investors can own 100% of their businesses in the free zone, offering full control over their operations.

3. Easy Repatriation: Companies can repatriate 100% of their profits and capital, making Fujairah a financially attractive option for international businesses.

4. Strategic Location: Fujairah’s location offers easy access to international markets in the Middle East, Asia, and Europe, providing a strategic advantage for businesses.

5. World-Class Infrastructure: The free zone offers modern infrastructure, high-speed internet, and state-of-the-art facilities, ensuring businesses operate efficiently.

6. Streamlined Setup Process: The Fujairah Creative City Free Zone offers a streamlined process for setting up a company in Fujairah, with minimal bureaucracy and quick turnaround times.

Conclusion

The Fujairah Creative City Free Zone presents a unique opportunity for entrepreneurs looking to establish a presence in the UAE. With its strategic location, business-friendly environment, and comprehensive support services, Fujairah is an ideal destination for business setup. Whether you are starting a new venture or expanding an existing business, the Fujairah Free Zone provides the resources and advantages you need to succeed.

[sonu27dc]

Unlock Global Growth: Freezone Company Setup in Dubai with VIP PRO Services

Dubai, the City of Gold, is a beacon for entrepreneurs and investors seeking a thriving business hub. With its world-class infrastructure, strategic location, and progressive policies, Dubai offers unparalleled opportunities for companies of all sizes. A key driver of this growth is the presence of numerous Free Zones, each catering to specific industries and offering a multitude of benefits.

But navigating the intricacies of Freezone company setup in Dubai can be daunting. That's where VIP PRO Services comes in. With over 5 years of experience and a team of experts, we help you establish your business seamlessly in the most suitable Free Zone.

Why Choose a Free Zone Company Setup in Dubai?

Dubai's Free Zones provide a unique and attractive proposition for businesses:

100% Foreign Ownership: Unlike the UAE mainland, Free Zones allow you complete control over your company, eliminating the need for a local sponsor.

Tax Benefits: Free Zone companies enjoy tax exemptions on corporate income and import/export duties, significantly boosting profitability.

Fast-Track Business Setup: The Free Zone authorities streamline the company registration process, enabling you to be operational within weeks.

World-Class Infrastructure: Free Zones boast state-of-the-art facilities, including business centers, co-working spaces, and warehousing solutions.

Repatriation of Profits: There are no restrictions on repatriating your company's profits, ensuring full financial flexibility.

Simplified Visa Process: Setting up a Free Zone company simplifies obtaining visas for yourself, your employees, and their dependents.

Choosing the Right Free Zone for Your Business

Dubai boasts over 45 Free Zones, each catering to specific industries and offering tailored benefits. VIP PRO Services will guide you through this diverse landscape to identify the Free Zone that best aligns with your business goals. Here are some key factors to consider:

Industry Focus: Some Free Zones specialize in sectors like technology (Dubai Silicon Oasis), media (Dubai Media City), or trade (Jebel Ali Free Zone). Choose a Free Zone that fosters connections and provides industry-specific support.

Location: Consider your target market's proximity and the Free Zone's access to transportation networks like airports and ports.

Licensing: Ensure the Free Zone offers the specific license required for your business activities.

Office Space: Evaluate the availability and cost of office space solutions within the Free Zone, including virtual offices, co-working spaces, and traditional office setups.

Cost Structure: Compare the Free Zone's registration fees, annual license fees, and visa processing costs to ensure they fit your budget.

VIP PRO Services: Your One-Stop Shop for Freezone Company Setup

At VIP PRO Services, we understand that establishing a company in a new environment can be overwhelming. That's why we offer a comprehensive suite of services to streamline the process:

Free Consultation: Our initial consultation allows us to understand your business goals and recommend the most suitable Free Zone.

Company Incorporation: We handle all the paperwork and liaise with the Free Zone authorities to ensure a smooth incorporation process.

Business License Acquisition: We guide you through obtaining the appropriate business license for your activities.

Visa Assistance: Our team assists you and your employees in securing residency visas in Dubai.

Bank Account Opening: We facilitate the opening of a corporate bank account for your business transactions.

Ongoing Support: We provide ongoing support with business regulations, accounting, and other essential services.

The VIP PRO Services Advantage

Here's what sets us apart:

Experience: Our team has a proven track record of successfully establishing Free Zone companies across various industries.

Expertise: Our in-depth knowledge of Dubai's Free Zones and regulations ensures efficient and compliant company setup.

Client Focus: We prioritize building strong relationships with our clients and understanding their unique needs.

Cost-Effectiveness: Our services are competitively priced, offering excellent value for your investment.

Efficiency: We work diligently to ensure a fast turnaround time for your Free Zone company setup.

Conclusion

Dubai's Free Zones Company setup in Dubai offer a launchpad for global success, and VIP PRO Services is your trusted partner in navigating this exciting opportunity. Contact us today for a free consultation and unlock the potential of your business in the dynamic city of Dubai. Together, let's turn your entrepreneurial vision into a thriving reality.

[dubaiorforeigners]

Cn you really buy a house in Dubai as a foreigner?

Yes, you can absolutely buy a house in Dubai as a foreigner. Dubai's real estate market is open to foreign investors, both residents and non-residents. There are a few things to keep in mind:

Freehold Areas: Foreigners can purchase property in designated freehold areas, which are specifically designed for foreign ownership. These areas include popular locations like:

Palm Jumeirah

Downtown Dubai

Dubai Marina

Arabian Ranches

Jumeirah Beach Residence

Dubai Hills Estate

Types of Ownership:

Freehold: This gives you complete ownership of the property and land, with the right to buy, sell, or lease it as you wish.

Leasehold: This gives you the right to occupy the property for a set period, usually up to 99 years.

Requirements:

Valid Passport: This is the main requirement for foreigners to purchase property in Dubai.

Funds: You will need to provide proof of funds for the purchase.

Mortgage: Foreigners can get mortgages from banks in the UAE, but the options may be more limited than for residents.

Process:

The buying process is fairly straightforward and similar to buying property in other countries. You'll need to:

Find a property in a freehold area.

Negotiate the price with the seller.

Sign a Memorandum of Understanding (MOU).

Pay a deposit (usually 10% of the purchase price).

Apply for a No Objection Certificate (NOC) from the developer.

Complete the transaction at the Dubai Land Department (DLD).

Benefits:

Investing in Dubai's real estate market can offer several benefits:

High rental yields: Dubai has a strong rental market, making it a good investment opportunity.

Capital appreciation: Property values in Dubai have historically shown good appreciation.

Tax-free income: Rental income earned in Dubai is tax-free.

Residency visa: Investing a certain amount in property can qualify you for a residency visa.

[asad-abbas]

“Top Recruitment Agencies in Pakistan Connecting Talent to Opportunities in the UAE

The United Arab Emirates (UAE) has emerged as a top destination for job seekers from around the globe, including Pakistan. With its thriving economy, tax-free income, and diverse job opportunities, the Recruitment Agency in Pakistan for UAE offers an attractive prospect for professionals aiming to advance their careers. However, navigating the job market in a foreign country can be challenging. This is where recruitment agencies in Pakistan step in, acting as vital intermediaries that connect skilled professionals with lucrative job opportunities in the UAE.

Role of Recruitment Agencies

Recruitment agencies play an essential role in bridging the gap between Pakistani talent and UAE employers. These agencies specialize in understanding the specific needs of both job seekers and employers, ensuring a seamless match. They manage the entire recruitment process, from initial candidate screening to final placement, which significantly eases the transition for job seekers.

Services Provided by Recruitment Agencies

Job Market Insights: Recruitment agencies have deep insights into the UAE job market. They stay updated with the latest industry trends and employer requirements, which allows them to provide valuable guidance to job seekers. This expertise helps candidates tailor their applications to meet the expectations of UAE employers.

Comprehensive Screening: Agencies conduct thorough screenings of candidates to ensure they meet the criteria set by employers. This includes evaluating qualifications, work experience, and soft skills. By doing so, they enhance the chances of job seekers securing suitable positions.

Exclusive Job Listings: Top recruitment agency in Pakistan have access to exclusive job openings that are not advertised publicly. This gives candidates a competitive edge in the job market, as they can apply for positions that might otherwise be out of reach.

Visa and Documentation Assistance: Navigating the visa process and other documentation requirements can be daunting. Recruitment agencies provide assistance with these formalities, ensuring that all necessary paperwork is completed accurately and on time.

Interview Preparation: To help candidates make a strong impression, recruitment agencies often offer interview coaching. This includes tips on how to answer common questions, how to dress, and how to conduct oneself during the interview.

Relocation Support: Moving to a new country involves many logistical challenges. Agencies offer relocation support, including finding accommodation, understanding local customs, and other practical aspects of living in the UAE.

Benefits of Using Recruitment Agencies

Expertise and Guidance: Recruitment agencies possess extensive knowledge of the UAE job market and provide invaluable guidance throughout the job search process.

Streamlined Process: By handling everything from resume preparation to visa processing, these agencies make the entire job search process more efficient and less stressful for candidates.

Networking: Agencies maintain strong relationships with top employers in the UAE, increasing the likelihood of candidates finding suitable positions.

Additional Support Services: Many agencies offer services such as cultural orientation and language training to help candidates adapt to their new environment.

Conclusion

For Pakistani professionals aiming to build their careers in the UAE, Best recruitment agency in Pakistan serve as indispensable allies. They provide the expertise, resources, and support needed to successfully navigate the competitive job market. By partnering with reputable agencies, job seekers can enhance their prospects of securing rewarding employment opportunities that align with their skills and career aspirations. The commitment of these agencies to connecting talent with opportunities plays a pivotal role in helping professionals achieve their dreams of working in the UAE.

[unifiedinvestment]

How To Invest In Dubai Real Estate

Dubai's economy is expanding, which has opened up a vast market for foreign investors and entrepreneurs looking for opportunities to invest in Dubai. Because of the favorable tax environment and growing property market, real estate investment in Dubai has been seeing a significant surge for the past few years. If you are planning to invest in Dubai's real estate, then read this post. In this post, we will discuss some of the important steps to take in order to invest in Dubai real estate. So, let's get started… 

Top 8 Tips To Invest In Dubai Real Estate

Here are out 8 best tips you can follow to stay ahead and make informed financial decision. Take a look…

1. Conduct Market Research 

Whether you want to invest in real estate or any other sector in Dubai, conducting thorough research is crucial. To begin, research the most recent trends, property prices, and demand. Determine the high-growth areas in the region, as these places have a strong potential for appreciation. Some of the high-growth areas of Dubai are Downtown Dubai, Dubai Marina, Palm Jumeirah, Business Bay, and so on. In order to make educated choices, it is important to stay abreast of market developments and laws in Dubai.

2. Know Your WHY 

Why do you want to invest in Dubai – You should know this. Find out your why. Determine whether you want to invest for the purpose of capital appreciation, rental income, or both. Knowing your goal will help you create an appropriate budget. 

3. Consider Your Budget

Determining your budget is essential for a successful investment in Dubai real estate. Once you know your Why, it's time to allocate a budget for the same. Make sure to take into account any additional expenses such as transaction fees, maintenance, and property management payments when determining the budget.

4. The Type Of Property 

Dubai is swamped with numerous property types, all known for their grandeur and world-class amenities. It is crucial for you to know the type of property you want to purchase in Dubai. For example, the City of Gold offers three types of residential properties such as townhouses, villas, and apartments. Similarly, there are commercial properties in different categories, which include, warehouses, retail shops, and office spaces. You will need to have a very clear understanding of these types and the kind of revenue you can generate with these real estate properties in Dubai. Make sure to choose after careful consideration.

5. Check Requirements and Regulations 

Every country, including the UAE, has its own laws and regulations regarding real estate investment. Check whether you can buy property in Dubai and what prerequisites you will need to fulfil for the same. 

6. Hire Professionals 

Look for a real estate investment company in Dubai that can help you find the right deal. There are numerous real estate investment companies in Dubai. However, it is crucial to work with a licenced firm with prior experience working in the Dubai market. Make sure to check their credibility and see that they have been delivering consistent results for their client. 

7. Conduct a Comprehensive Inspection

Taking every step carefully is crucial, especially when it is about investing your hard-earned money somewhere. Hence, it is crucial that you conduct a comprehensive inspection of the property to ensure that it lives up to your standards. Also, confirm that the property is legally free and clear for purchase. For this, make sure to verify the title deed with the Dubai Land Department (DLD). Also, check the developer's track record and reputation before investing in Dubai real estate.

8. Discuss the Price and Other Details

Last but not least, discuss the price and other details with the seller or the developer. Make sure you sign the dotted lines only after reading the terms and conditions of the sale outlined in a Memorandum of Understanding (MOU). Aside from that, other legal procedures and documentation should be taken care of accordingly. 

Putting it all together….

So, these are the top 8 tips you can follow to make a mindful choice in Dubai real estate. Investing in Dubai real estate is the most lucrative option at the moment. If you follow these tips, you will be able to make a profitable investment that will provide you with great returns in one of the most exciting real estate markets in the world. However, if following all these tips seems like a task, then join hands with a reliable real estate investment company in Dubai. Unified Investment is a reliable investment firm in Dubai. At Unified Investment, we have a team of highly skilled and qualified professionals who can help you, from soup to nut, to make well-informed financial decisions. 

[simplysloved]

Federal Corporate Tax in UAE – Published Official CT Legislation

After the announcement by the government regarding the benefits of Corporate Tax in UAE (CT) and the frequently asked questions (FAQs) on January 31, 2022, as well as the publication of the Public Consultation Document in April 2022, the Federal Decree-Law no. 47 of 2022 regarding the Taxation of Corporations and Businesses UAE Corporate Tax Law has been released on December 9, 2022.

The UAE Corporate Tax Law is Federal Decree-Law No. 47 of 2022, enacted on October 3, 2022, and will be in force 15 days following its public publication by the Official Gazette. The UAE Corporate Tax law applies to profits from businesses in financial years beginning on or after June 1, 2023.

This article offers brief highlights of the new rules which were made public by The Ministry of Finance (“MoF”) and the Federal Tax Authority (“FTA”). It is important to note that the rules closely match those in the Public Consultation Document.

Additional details will be deferred to Cabinet and Tax Authority Decisions. Further guidance is expected to be issued to finalize all UAE Corporate Tax Legislation in areas such as the Free Zone and Director compensation guidelines. Following the publication of Corporate Tax Legislation, the MoF has confirmed that the implementation is scheduled for June 2023.

Scope of Corporate Tax in UAE

Corporate Tax in UAE will be applied to the adjusted net profit of the worldwide accounting of the company.

The UAE Corporate Tax regime has two rates of different types:

A tax-free rate will be applied to tax-paying earnings up to     a certain amount that is to be set in the Cabinet Decision (the FAQs relate to the threshold of AED 375,000)

The tax statutory standard rate is 9 percent.

The relative minimal tax burden of just 9% aims to ensure that the UAE has a competitive tax rate in the global marketplace.

The UAE Corporate Tax Law is silent in Article 3 on aspects governing the global minimum of 15% tax rate. That applies to MNEs that fall within the scope of Pillar Two, which is part of BEPS Pillar 2. OECD BEPS project and applies to multinational corporations (MNCs) that have consolidated worldwide revenues exceeding EUR 750 million (c. 3.15 billion AED) 3.15 billion) at any time in two of the preceding four years. The FAQs address the possibility of adopting within the UAE of BEPS Pillar 2.

Individuals:

Individuals also are affected by corporate taxation if they engage in business activities and are in line with general VAT rules of business activities. The Cabinet is expected to decide how to apply Corporate Tax in UAE to natural individuals. Thus, Corporate Tax in UAE does not apply to a person’s salary and other earnings earned through employment.

However, those who are earning income through an enterprise activity will be covered by Corporate Tax in UAE.

Free Zones

A clearly defined and specific policy (subject to a further Cabinet decision) is set out for companies established in UAE-free zones. These zones:

Maintain sufficient substance and

Earn qualifying income.

What exactly is a sufficient income will be defined by a Cabinet decision. The Public Consultation Document could refer to the requirement to not do business with the mainland UAE. It is stated that Free Zone businesses can choose to be taxed as a corporation at a rate of 9 percent.

The extensive UAE rules for sourcing are in force and essential for the Free zone companies seeking to comply with the substance requirements.

Withholding Tax

There is a possibility of a zero-withholding tax on specific categories in the UAE State Sourced income produced by a non-resident. In turn, foreign investors who do not conduct any activities in the UAE won’t be taxed within the UAE.

Foreign Entities

Foreign entities can be considered residents in the UAE if they are managed and controlled by the UAE. In the case of foreign companies that aren’t recognized as residents of the UAE and who possess a permanent establishment in the UAE, The Definitions of Permanent Establishment have been clarified as fixed PE as well as the term “agency PE. Further details on PEs will be subject to a Ministerial decision.

Exempt Entities

The UAE Corporate Tax Law has retained the exemption for Investment Managers of the Public Consultation Document. Specific rules apply to Partnerships as well, as Family Foundations can also use to increase tax transparency 

Government entities and government-controlled entities as well as qualifying public benefit entities and qualifying investment funds will be exempt from the UAE Corporate Tax Law.

Extractive companies (upstream oil and gas companies) are exempt if they earn revenue from the extraction business.

Bank operations will be restricted to Corporate Tax in UAE (unless your institution operates in a Free Zone and is eligible for the zero-interest rate).

Implementation Date

Article 69 of the UAE Corporate Tax Law provides that the Law applies to Tax Periods that begin on or after June 1, 2023.

Companies with a fiscal year that begins on January 1 are subject to CIT beginning 1. January 2024.

Financial records & Requirement to Maintain Audited Statements

Taxpayers must prepare and maintain financial statements backed by all records and documents to support UAE Corporate Tax returns. The forms should be kept for a minimum of seven years.

That will apply to every UAE entity (unless included in the Corporate Tax Group). Every entity must make separate financial statements. However, all entities will not be audited for financial information. Subsequent Cabinet Decision(s) will outline the tax-paying categories required to keep audited or certified accounts.

Small Business Tax Relief

The possibility of relief for small-sized businesses with gross or revenue less than the threshold of a specific amount is made. Qualifying businesses will be considered not to have tax-deductible income and must comply with a simplified set of requirements.

Revenues and not tax-deductible income determine the threshold. It is likely to be confirmed by an upcoming Cabinet Decision.

Deductible / Non-Deductible Expenses

The expenses incurred solely and exclusively to serve business needs (and which are not to be capitalized) can be deducted.

Deductions are not allowed for expenditures incurred to generate tax-free income. Deductibility is only permitted in the case of any price with a mixed purpose. Interest expense is deductible subject to a maximum of 30% of EBITDA.

Financial assistance rules have been implemented to prevent businesses from getting funding to pay dividends or distribute profits.

Entertainment costs are limited to 50 percent.

Non-deductible expenses include contributions to a non-qualifying Public Benefit Entity and bribes, fines, and dividends.

Importantly, amounts taken from the business by an individual who is a tax-deductible individual are not deductible.

Exempt Income & Relief

 The following income categories are exempt from Corporate Tax in UAE (Article 22 of the UAE Corporate Tax Law):

Capital Gains and Dividends, and other profits distributions     from a Resident

Capital Gains or Dividends, as well as other profits distributions     from Qualifying shareholding in a legal entity of a foreign country with a     holding time of 12 months and a minimum contribution of 5 percent, and at     an absolute minimum of 9 percent CIT for the source country. From which     they originate.

The income from a foreign PE is subject to the conditions     & an option to use an exemption (rather than credit)

The income earned by an individual, not a country resident,     comes from the operation of ships or aircraft involved in international     transport.

These transactions can be subjected to a specific reduction, i.e., it is essentially an exemption from taxation:

Restructurings and intragroup transactions that qualify as     qualifying entities are eligible when they hold 75 percent common ownership

Restructuring of businesses is a relief from the government     with specific conditions.

Transfer Pricing

Related parties’ transactions should be carried out under the arm’s-length arms-length principle outlined in Section 34 of the UAE Corporate Tax Law. It also states that the five standard OECD transfer pricing techniques are suitable to help support the arm’s-length arms-length nature of arrangements with related parties and allow alternative methods if needed.

Article 34 states that should there be an adjustment by a tax authority from a foreign country that affects a UAE entity, the application must be submitted to the FTA to request a similar adjustment that allows the UAE firm to be exempt against double taxation. The resulting adjustments relating to domestic transactions do not require an application.

The requirements for documentation on transfer pricing are covered by Article 55. UAE businesses must follow the transfer pricing regulations and the documentation requirements set by references to the Transfer Price Guidelines.

These lead to three-tier reports, i.e., master file, local file, and country-by-country reporting. The connection to a controlled transactions disclosure form is provided (details of which are to be determined).

It is important to note that no thresholds of materiality are provided. Separate legislation will be announced shortly. Advance pricing plans will become made available via the normal clarification process currently in place.

UAE has introduced provisions requiring the payment and benefits given to persons connected to be tax-deductible in the market value. The same rules are followed in section 34 of UAE CIT Law for applying this principle.

Administration & Enforcement

The MoF is the sole authority for multilateral or bilateral     agreements and the exchange of information between countries.

The FTA is responsible for the corporate tax system’s     administration, collection, and application. The Tax Procedures Law sets     fines and penalties.

Companies will require an FTA VAT     Registration UAE.

Companies affected by Corporate Tax in UAE must submit a CT     report electronically for each period of financial activity within nine     months from the close of that Financial Period. (A financial period     generally refers to any financial period that is 12 months long)

Free Zone companies that are which are subject to CIT at 0     percent CIT must also submit a Corporate Tax Return.

Foreign Tax Credits

Tax credits for foreign taxation are allowed for UAE corporate tax due as per the Public Consultation Document. Businesses are entitled to claim the lesser amount of corporate tax due and the sum of withholding tax that is effectively taken out. There is no carrying forward. There will be no credit for taxes paid to an individual Emirate.

Tax Grouping

Fiscal unity or Tax Group: UAE companies can create a “fiscal unity” or Tax Group to serve UAE purposes. The primary requirement for the formation of a Tax Group is to comply with an (in)direct minimum shareholding of 95 percent.

Free zone entities subject to zero percentage shareholding are not eligible to join the Tax Group. Furthermore, the parent (which may be intermediate) is required to be a UAE company.

Losses 

By article 37 of the UAE Corporate Tax Law, losses can be carried forward for up 75 percent of taxable income. Losses can be transferred between members of the same group of corporations if they are 75 percent direct or indirectly owned. Losses cannot be transferred from exempt people or entities in the free zone. The loss offset is subject to the cap of 75 when it comes to businesses that roll forward losses.

Tax-deductible losses may be lost in the event of an ownership change (50 percent or more); however, the new owner is operating the same or similar business. The requirements to be considered for this have been established.

Anti-Abuse

UAE will implement an Anti-Abuse General Rule known as “GAAR”. The GAAR applies to cases where one of the principal reasons for a transaction is to gain an advantage in taxation for corporations that is not in line with the intent, intent, or purpose of UAE Corporate Tax Law.

The FTA will be able to address and adjust or counteract the transaction. The GAAR only applies to arrangements or transactions made after the UAE Corporate Tax Law is published in the UAE Official Gazette on October 10, 2022, in issue #737.

Summary

The publication of UAE Corporate Tax Law and confirmation of a rate of 9 The UAE have established a global affordable Corporate Tax rate and confirmed their intention to implement Corporate Tax in June 2023.

The information to be released in the next few months will be fleshed out and provide a greater understanding of the implementation process. Nevertheless, several key elements are already confirmed, including introducing compulsory transfer pricing rules.

[simplysolvedagency]

Federal Corporate Tax in UAE – Published Official CT Legislation

In the wake of the public announcement regarding the benefits of Corporate Tax in UAE (CT) and the frequently asked questions (FAQs) on January 31, 2022, as well as the publication of the Public Consultation Document in April 2022, the Federal Decree-Law no. 47 of 2022 regarding the Taxation of Corporations and Businesses Corporate Tax Law has been released on December 9, 2022.

The UAE Corporate Tax Law is Federal Decree-Law No. 47 of 2022, issued on October 3, 2022, and becomes effective 15 days following its announcement in the Official Gazette. The Corporate Tax law applies to the profits of businesses for fiscal years that begin on or after June 1, 2023.

This article gives brief highlights of the new rules, which were it was announced by The Ministry of Finance (“MoF”) and the Federal Tax Authority (“FTA”). It is important to note that the new rules align with the Public Consultation Document.

More details are awaiting Cabinet and Tax Authority Decisions, and further guidelines are expected to be issued to finalize all Corporate Tax Legislation in areas such as the Free Zone and Director compensation guidelines. Following the publication of Corporate Tax Legislation, the MoF has confirmed that its introduction is scheduled for June 2023.

Scope of Corporate Tax in UAE

Corporate Tax in UAE applies to the adjusted net profit of the worldwide accounting of the company.

The Corporate Tax in UAE Regime has two rates of different types:

A tax-free rate applies to tax-deductible earnings up to a     certain amount that is to be set in a Cabinet Decision (the FAQs relate to the threshold of AED 375,000)

The tax standard for the statutory rate is 9 percent.

Confirming the minimal tax burden of just 9% aims to ensure that the UAE has a competitive tax rate worldwide.

The Corporate Tax Law is silent in Article 3 on aspects governing the global minimum of 15% tax rate. That applies to MNEs that fall within the definition of Pillar Two, which is part of BEPS Pillar 2. OECD BEPS project and applies to multinational corporations (MNCs) that have consolidated worldwide revenues exceeding EUR 750 million (c. the equivalent of AED 3.15 billion) at any time in two of the last four years. The FAQs address the possibility of adopting within the UAE of BEPS Pillar 2.

Individuals:

Individuals are affected by corporate taxation if they engage in business activities that are in line with an overall VAT concept for business activities. A Cabinet decision is anticipated regarding how to apply Corporate Tax in UAE to natural people. That means that Corporate Tax does not apply to a person’s salary and other earnings earned through employment. However, those earning income through part of a business venture would be covered by Corporate Tax in UAE.

Free Zones

A specific and defined regime (subject to a further Cabinet decision) is provided for all businesses in UAE-free zones. These zones:

Maintain sufficient substance and

Earn qualifying income.

What is a sufficient income will be defined by a Cabinet decision. According to the Public Consultation Document, this could refer to the requirement not to do Business with the mainland UAE. It is stated that Free Zone companies can choose to be taxed as a corporation at a rate of 9 percent.

A wide range of UAE rules for sourcing is in force and essential for businesses in the Free zone who want to satisfy the requirements of substance.

Withholding Tax

There will be no withholding tax on specific categories of UAE State Sourced income produced by a non-resident. In turn, foreign investors who don’t carry any businesses in the UAE, in general, will not be taxed within the UAE.

Foreign Entities

Foreign entities can be residents of the UAE if they are operated and controlled in the UAE. Foreign entities who aren’t considered to be residents in the UAE, however, may have a permanent establishment in the UAE. The Definitions of Permanent Establishment have been clarified as fixed PE and the term “agency PE. Further details on PEs will be subject to a Ministerial decision.

Exempt Entities

The UAE Corporate Tax Law retains the exemption for Investment Managers exempted from Public Consultation Documents. Rules apply to Partnerships, and Family Foundations can also use to increase tax transparency.

Government entities and government-controlled entities, as well as qualifying public benefit entities and investment funds, will be exempt from the UAE Corporate Tax Law. Extractive companies (upstream oil and gas companies) are exempt if they earn revenue from their extractive businesses.

Banking operations are affected by Corporate Tax in UAE (unless an institution falls located in a Free Zone and is eligible for the zero-interest rate).

Implementation Date

Article 69 of the UAE Corporate Tax Law provides that the Law will apply to Tax Periods that begin on or after June 1, 2023.

Businesses with a financial year that begins on January 1 are subject to CIT starting on January 1, 2024.

Financial records & Requirement to Maintain Audited Statements

Taxpayers must create and keep financial statements backed by all records and documents to support Corporate tax returns. The forms must be kept for a minimum of seven years.

This obligation will apply to every UAE entity (unless included in the Corporate Tax Group).

Every entity must create its financial statements. However, only some entities may be audited for financial information. A subsequent Cabinet Decision(s) will define the types of tax-paying individuals that must keep certified or audited accounting statements.

Small Business Tax Relief

Reliefs for small-scale businesses with revenues or gross income below the threshold of a specific amount are made. Qualifying businesses will be considered to have no tax-deductible income and must comply with a simplified set of requirements.

The threshold is determined by the revenue, not the earnings or taxable income. That is likely to be confirmed by an upcoming Cabinet Decision.

Deductible / Non-Deductible Expenses

The expenses incurred solely and exclusively for business reasons (and which are not to be capitalized) can be deducted.

Deductions are not allowed when expenses are incurred to earn tax-free income. In the case of any expenditure with a mixed purpose, removal is not permitted. Interest expense is deductible subject to a limit of 30% of EBITDA.

Financial assistance rules are in effect and prevent companies from getting funding to pay dividends or distribute profits.

Entertainment costs are set at 50 percent.

Donations not tax-deductible include those made to a non-Qualifying Public Benefit Entity and bribes, fines, and dividends.

Notably, the amounts withdrawn from the Business by any natural person who is a tax-deductible individual are not deductible.

Exempt Income & Relief

The following income categories will be exempted from Corporate Tax in UAE (Article 22 of the UAE Corporate Tax Law):

Capital Gains and Dividends, and other distributions of     profits from a Resident

Capital Gains such as dividends, capital gains, and other     distributions from Qualifying shareholding in a legal entity of a foreign     country that is subject to a hold duration of 12 months, the minimum     contribution of 5 percent, and at the minimum, subject to 9 percent CIT     for the source country. From which they originate.

The income from a foreign PE is subject to certain conditions     and the option to apply an exemption (rather than credit)

Earnings of an individual who is not a resident of the     country come from operating ships or aircraft involved in international     transport.

These transactions can be subjected to a specific reduction, i.e., effectively an exemption from taxation:

Restructurings and intragroup transactions that qualify as     qualifying Entities will be eligible when they hold 75 percent common     ownership.

Restructuring relief for businesses under specific conditions.

Transfer Pricing

Related party’s transactions should be carried out under the arm’s-length principle as outlined in Section 34 under the UAE Corporate Tax Law. In addition, it states that the five conventional OECD Transfer Pricing strategies are suitable to help support the arm’s length character of arrangements with related parties and allows the use of alternative methods when needed.

Article 34 provides that when a tax authority adjusts to a foreign country that affects the tax structure of a UAE entity, the application must be submitted to the FTA to request a similar adjustment that allows the UAE firm to be exempt against double taxation. Any adjustments that result from domestic transactions do not require an application.

The requirements for documentation on transfer pricing are covered in Article 55. UAE businesses will have to follow the rules for transfer pricing and the documentation requirements set by OECD Transfer Price Guidelines, which lead to three-tier reports, i.e., master file, local file, and country-by-country reporting. A reference to a controlled transaction disclosure form is provided (details of which are still to be determined).

It should be noted that no thresholds for the materiality of the product are provided. Separate legislation will be released later. Advance pricing plans will become made available via the normal clarification process currently in place.

UAE has introduced provisions requiring the payment and benefits given to persons connected to be tax-deductible in their market value. The same rules are followed in Article 34 of the UAE CIT Law.

Administration & Enforcement

The MoF is the sole authority for purposes of multilateral     bilateral or multilateral agreements as well as for the exchange of     information between countries.

The FTA is accountable for the corporate tax system’s     administration, collection, and application. Fines and penalties are governed     under a law known as the Tax Procedures Law.

Companies will require a VAT Registration UAE from     the FTA.

Companies that are required to comply with UAE Corporate Tax     are required to submit the Corporate Tax return online for every financial     year within nine months from the date of the end of that Financial Period.     (A financial period generally refers to any financial period that is 12     months long)

Free Zone companies that are subject to CIT at 0 percent CIT     must also submit a CT Return.

Foreign Tax Credits

Tax credits for foreign taxation are allowed for Corporate Tax in UAE due as per the Public Consultation Document. Businesses can claim less corporate tax owing and the sum of tax withholding effectively removed. There is no way to carry forward. There will be no credit for taxes paid to the individual Emirate.

Tax Grouping

Fiscal unity or Tax Group: UAE companies can form a “fiscal unity” or Tax Group to serve UAE purposes. The main requirement for a Tax Group is to comply with the (in)direct sharing requirement, which is 95 percent. Free zone entities subject to zero percent cannot join the Tax Group. Additionally, the parent (which may be intermediate) must be a UAE company.

Losses

By article 37 of the UAE Corporate Tax Law, losses can be carried forward for up 75 percent of taxable income. Losses can be transferred between members of the same group of corporations if those entities have 75 percent direct or indirectly owned. Losses cannot be transferred from exempt individuals or entities that are free zone. Loss offsets are also subject to the cap of 75 for businesses that roll forward losses.

Tax-deductible losses may be lost in the event of an ownership change (50 percent or more) if the new owner runs the same or similar Business. The criteria to be considered for this have been established.

Anti-Abuse

UAE will adopt an Anti-Abuse General Rule, also known as “GAAR.” The GAAR applies to cases where one of the primary reasons for a transaction is to gain an income tax benefit for the corporation that is incompatible with the purpose or intent of the UAE Corporate Tax Law.

The FTA will deal with and alter or counteract the transaction. The GAAR only applies to agreements or transactions entered after the UAE Corporate Tax Law is published in the UAE Official Gazette on October 10, 2022, in issue #737.

Summary

With the publication of the UAE Corporate Tax Law and confirmation of a 9% tax rate and a 9% rate, UAE has established a globally competitive rate for Corporate Tax in UAE and confirmed its intention to implement Corporate Tax in June 2023.

It is expected that additional information to be released over the coming months to be fleshed out and provide more excellent knowledge of its implementation. Nevertheless, several key elements are already confirmed, including introducing compulsory transfer pricing rules.

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