We are Registered Accounting and Tax Consultancy in Dubai UAE

Corporate Tax Optimization

Tax Clinic Team in the office

Corporate Tax Services

At Dirham Tax, we offer comprehensive Corporate Income Tax services tailored for businesses operating in the UAE. With the recent implementation of corporate tax regulations in the UAE, it’s crucial for companies to stay compliant while optimizing their tax positions. Our team of experts provides end-to-end support, from tax planning and registration to filing and compliance, ensuring your business meets all regulatory requirements efficiently. Let us help you navigate the complexities of the UAE’s corporate tax system, allowing you to focus on growing your business.

Ensuring compliance with Corporate Income Tax (CIT) in the UAE involves several key steps. Although corporate tax was introduced in the UAE in 2023, businesses need to stay up to date with current laws, deadlines, and processes to remain compliant. Below is an outline of the essential steps:

(1) Understand the Corporate Tax Law Framework:

  • Familiarize yourself with the Federal Decree-Law No. 47 of 2022 regarding the taxation of corporations and businesses.
    The law applies to both UAE-incorporated companies and foreign entities with a taxable presence in the UAE.
  • Ensure you understand which types of income and businesses are taxable and which are exempt (e.g., natural resource extraction, free zone companies meeting specific conditions). 

(2) Determine Whether Your Business is Subject to Corporate Tax:

  • Corporate tax applies to companies whose taxable income exceeds AED 375,000 annually. Smaller businesses are exempt.
  • Verify if your business qualifies for any free zone tax exemptions or other special arrangements.
 

(3) Obtain a Tax Registration Number (TRN):

  • Businesses subject to corporate tax must register with the Federal Tax Authority (FTA) and obtain a **Tax Registration Number (TRN).
  • Ensure timely registration to avoid penalties.
 

(4) Maintain Accurate Accounting Records:

  • Implement robust accounting systems to ensure that financial records comply with International Financial Reporting Standards (IFRS).
  • Keep proper financial statements, including profit and loss accounts, balance sheets, and other documents that reflect your taxable income.
  • Retain records for at least 5 years, as required by law.
 

(5) Identify Deductions and Allowable Expenses:

  • Businesses may deduct certain expenses when calculating taxable income, such as operational costs, depreciation, and interest on loans.
  • Ensure proper documentation to support any deductions claimed.
 

(6) Taxable Period and Financial Year Alignment:

  • Ensure that your financial year is aligned with the taxable period (usually the calendar year unless otherwise approved).
  • Report taxable income based on the taxable period for your business.
 

(7) Prepare and Submit Tax Returns:

  • File your annual corporate tax return with the FTA. The return is usually due within **9 months** of the end of the relevant financial year.
  • The return must be filed online through the FTA portal.
 

(8) Pay Corporate Income Tax:

  • Calculate and pay the 9% corporate tax on your taxable income above AED 375,000.
  • Ensure timely payments to avoid penalties for late payment.
 

(9) Stay Updated on Free Zone Exemptions:

  • If operating in a free zone, stay updated on compliance requirements to maintain your 0% tax rate. This may involve ensuring that your activities meet the FTA’s criteria for qualifying free zone entities.
 

(10) Comply with Transfer Pricing Regulations:

  • If your business conducts transactions with related parties (e.g., subsidiaries), ensure compliance with transfer pricing rules and maintain documentation as required.
 

(11) VAT (if applicable):

  • If your business is also VAT-registered, ensure that your VAT returns and corporate tax filings are properly synchronized.
 

(12) Stay Informed About Tax Law Changes:

  • The UAE’s tax regime is relatively new and may evolve. Stay informed through FTA announcements and updates.
  • Consider engaging tax professionals or a consultancy service to assist with compliance and updates.
 

(13) Adopt Tax Risk Management:

  • Implement internal controls to manage tax risks, including regular reviews and audits of financial statements.
  • Ensure the business is well-prepared for tax audits and inquiries by the FTA.
 
Ensuring compliance with UAE corporate tax requires a proactive approach, regular monitoring of tax regulations, and efficient record-keeping. Many businesses in the UAE also engage tax professionals to help navigate compliance requirements.