Naveed Ahmed - Chartered Accountant ACA, FCCA, CPA, AFA, MIPA on LinkedIn: #uaebusiness #taxreform #corporatetax #freezones #uaefinance #legalupdates… (2024)

Is Your Free Zone Company Ready for Corporate Tax?With just two months left before the year ends—since most companies follow the calendar year as their financial year—where does your company stand?It's important for Free Zone companies to ensure compliance with the conditions that maintain their tax-exempt status.As per the UAE Corporate Tax Law, a Qualifying Free Zone Person (QFZP) is a company or branch registered in a free zone, subject to certain conditions:- Maintaining adequate substance in the UAE- Deriving qualifying income- Satisfying transfer pricing requirementsThe tax rates for a QFZP are:- 0% on Qualifying Income- 9% on non-Qualifying Income, subject to de minimus conditionsTo be a QFZP, the company must have:- A physical presence (e.g., office or premises)- A sufficient number of qualified employees for its core income-generating activities- Adequate operating expenses, such as rent, salaries, and utilitiesActivities can be outsourced within the Free Zone to a Related Party or third party, under the QFZP's adequate supervision.Failure to maintain adequate substance will result in the loss of QFZP status from the beginning of the relevant tax period and for the subsequent four tax periods. This would obligate the company to pay a 9% corporate tax for a minimum of five years.If your Free Zone entity doesn't yet meet the QFZP conditions, now is the time to analyze the costs vs. tax savings to decide whether to invest in office and other expenditures or opt to be a taxable entity.For more details, please contact us at info@hallmarkauditors.com, call 042599055, or chat with us 24/7 at [Hallmark Auditors](https://lnkd.in/dpaE9zk).#freezone #corporatetax #corporatetaxuae #corporatetaxes #taxadvisory #taxbenefits #taxes2023 #corporatetax2023 #uae #dubai

1

Is Your Free Zone Company Ready for Corporate Tax?With just two months left before the year ends—since most companies follow the calendar year as their financial year—where does your company stand?It's important for Free Zone companies to ensure compliance with the conditions that maintain their tax-exempt status.As per the UAE Corporate Tax Law, a Qualifying Free Zone Person (QFZP) is a company or branch registered in a free zone, subject to certain conditions:- Maintaining adequate substance in the UAE- Deriving qualifying income- Satisfying transfer pricing requirementsThe tax rates for a QFZP are:- 0% on Qualifying Income- 9% on non-Qualifying Income, subject to de minimus conditionsTo be a QFZP, the company must have:- A physical presence (e.g., office or premises)- A sufficient number of qualified employees for its core income-generating activities- Adequate operating expenses, such as rent, salaries, and utilitiesActivities can be outsourced within the Free Zone to a Related Party or third party, under the QFZP's adequate supervision.Failure to maintain adequate substance will result in the loss of QFZP status from the beginning of the relevant tax period and for the subsequent four tax periods. This would obligate the company to pay a 9% corporate tax for a minimum of five years.If your Free Zone entity doesn't yet meet the QFZP conditions, now is the time to analyze the costs vs. tax savings to decide whether to invest in office and other expenditures or opt to be a taxable entity.#jafza #DMCC #DDA #DIFC #DAFZA #taxcompliance #taxconsultants #auditors #hallmarkauditors

18

2 Comments

Check our latest article about the Corporate Income Tax Registration in the UAE #tax#uae#rödl&partner

4

How do you determine Taxable Income for UAE Corporate Tax?The Taxable Income for a Tax Period will be the accounting net profit (or loss) of the business, after making adjustments for certain items specified in the Corporate Tax Law and related implementing decisions.The accounting net profit (or loss) of a business is the amount reported in its financial statements prepared in accordance with International Financial Reporting Standards (IFRS).Adjustments to the accounting net profit (or loss) will need to be made for the following items:- Unrealised gains and losses (subject to the election made regarding the application of the realisation principle);- Exempt Income such as qualifying dividends and capital gains;- Gains or losses arising on transfers within a Qualifying Group;- Gains or losses arising on transfers arising from qualifying business restructuring transactions as per article (27) of the corporate tax law;- Deductions which are notallowable for Corporate Tax purposes;- Transactions with Related Parties and Connected Persons;- Transfers of Tax Losses within a group where the relevant conditions are met;- Incentives or tax reliefs; and- Any other adjustments as specified by the Minister.#uaecareers #uaecorporatetax #uaeconstruction #uaecareer #uaebusiness #uaebusinesssetup #uaebusinesses

1

❗ MMJS Corporate Tax Alert ❗ UAE’s Ministry of Finance has issued Federal Decree Law No. 60 of 2023 which amends the UAE Corporate Tax (CT) law to introduce BEPS 2.0 Pillar 2 Rules. The amendment codifies Pillar 2 in the CT Law by introducing certain enabling provisions i.e. new definition of top-up tax and multinational enterprise; levy of effective tax rate at the rate of 15%. Detailed rules in relation to the date of applicability, methodology and procedures of implementing Pillar 2 will be released by way of a separate Decision.Refer to our Corporate Tax Alert for more information. Should you have any queries, reach out to our team atuae.ct@mmjs.coSurandar Jesrani Aastha Jain Aunali Merchant Sanjay Shukla Sneha Chedda Rishi Sapra Malavika Muralidharan Madhura Rao#MMJSConsulting #corporatetax #corporatetaxuae #tax #finance #dubai #uae #gcc #growth #business #updates #mmjsalerts

34

🚀 Understanding the Taxation of Foreign Source Income under UAE Corporate Tax Law 🇦🇪Navigating the complexities of corporate tax law can be challenging, especially for businesses and individuals with foreign source income. Here's a quick guide to help you understand how foreign source income is taxed under the UAE Corporate Tax Law, as depicted in the latest chart from the Federal Tax Authority.Taxable Person Classification1. Resident Person:Juridical Person:Conducting Business in UAE?Yes: Subject to Corporate Tax on foreign source income if the turnover exceeds AED 1 million.No: Not subject to Corporate Tax.Natural Person:Conducting Business in UAE?Yes: Subject to Corporate Tax on foreign source income that relates to UAE business activities if the turnover exceeds AED 1 million.No: Not subject to Corporate Tax.2. Non-Resident Person:Juridical Person:Permanent Establishment in UAE?Yes: Subject to Corporate Tax on foreign source income attributable to the UAE Permanent Establishment.No: Foreign source income is not subject to Corporate Tax.Natural Person:Permanent Establishment in UAE?Yes: Subject to Corporate Tax on foreign source income attributable to the UAE Permanent Establishment if the turnover exceeds AED 1 million.No: Not subject to Corporate Tax.Key Points to Remember:Turnover Threshold: AED 1 million in a Gregorian calendar year is a critical threshold for determining tax liability.Exclusions: Wages, personal investment income, and real estate investment income do not count as turnover from business activities.Withholding Tax: Foreign source income subject to withholding tax is currently at a rate of 0%.Understanding these rules is crucial for compliance and optimizing your tax strategy. If you're navigating the UAE's tax landscape, ensure you're up-to-date with these regulations to avoid any surprises.Feel free to reach out if you have any questions or need further clarification!Picture Source: Reddit#UAE #CorporateTax #TaxLaw #Business #Finance #Taxation #GlobalBusiness

The UAE Corporate Tax adopts an approach where capital gains arising from the disposal of assets are assimilated into the annual taxable income, mirroring the treatment of other business incomes.This unified approach underscores the need for a deeper understanding of how capital gains intersect with broader corporate tax obligations.One area of particular interest lies in the sale of shares since the exemption from Corporate Tax on gains derived from the disposal of shares and other ownership interests in both UAE and non-UAE juridical persons is subject to the same conditions under Participative exemption criteria.Conditions to avail Participative Exemption:1. Minimum ownership stake of 5% in the company, or2. Acquisition cost of the interest amounting to at least AED 4 million, AND3. Commitment to holding or intending to hold the interest for a minimum duration of 12 months.Also, it is crucial to note that transactions involving real estate assets, including parcels of land and physical structures, also fall under the purview of capital gain taxation within the UAE corporate tax regime. Just like other capital assets, any gains derived from these transactions are integrated into the company's annual taxable income. Understanding how these real estate transactions are treated ensures comprehensive tax planning and adherence to regulatory requirements.Let's explore the depths of capital gain taxation, harnessing our wealth of expertise to offer tactical counsel and direction to enterprises aiming to enhance their tax strategies within the UAE's corporate tax system.#UAEBusiness #CorporateTax #Taxation #Accounting #UAEFinance #TaxStrategy #CapitalGains #RealEstateInvesting #TaxCompliance #FinancialConsulting

16

Corporate Tax in Free Zone🇦🇪After numerous recently conducted events, I can endlessly write and talk about taxes in the UAE. So today, let's look at corporate tax in the Free Zone.Firstly, let's focus on what qualified individuals in the Free Zone must do if they haven't chosen the regular tax system:👉🏻 Generate qualified Income.👉🏻 Have an adequate substance in the UAE.👉🏻 Meet de minimis requirements (non-qualified Income should not exceed the lower of the following: 5 million AED or 5% of total Income).👉🏻 Comply with transfer pricing rules and documentation preparation.👉🏻 Undergo financial statement audit according to IFRS.Remember that qualified Income is taxed at a rate of 0%.🔺 Income from operations with other entities in the Free Zone, excluding Income from excluded activities.🔺 Income from qualified activities received from individuals not registered in the Free Zone.🔺 Any other income (within the minimum threshold of 375,000 AED).🔺 Any other income is taxed at a rate of 9%.Here are lists of excluded and qualified activities 👇🏻 EXCLUDED ACTIVITIESOperations with individuals, except for certain qualified activitiesBanking activitiesInsurance activitiesFinancial and leasing activitiesOwnership or operation of real estate in the UAE, except for commercial, with certain exceptionsOwnership or operation of intellectual property assetsActivities ancillary to those mentioned aboveQUALIFIED ACTIVITIESProduction or processing of goods and materialsOwnership of shares and other securitiesOwnership, management, and operation of vesselsReinsurance servicesFund management servicesCapital and investment management servicesHeadquarters services for related partiesTreasury and financial services to related partiesFinancing and leasing of aircraft, including engines and componentsDistribution of goods or materials in the designated zone or from the zone to a buyer who resells such goods or materials or processes or modifies such goods, materials, or parts thereof for sale or resaleLogistics servicesActivities ancillary to the above-mentioned #UAE #Taxation #corporatetax #freezone

58

11 Comments

The UAE ushers in a new corporate tax era with Law No. 47 of 2022, effective June 1, 2023. Complementing this, Ministerial Decision No. 116 and the Corporate Tax Guide delve into dividend income and participation exemption, reshaping tax.UAE corporate tax law grants exemptions to natural persons, residents, or non-residents for personal investments, excluding business-related taxation. Tax applies only when UAE business turnover exceeds Dh1 million. Dividend income as personal investment remains tax-free.Juridical residents are taxed globally, non-residents for UAE-sourced and PE-related income. Taxable income follows IFRS, with rates from 0% under Dh375,000 to 9% over Dh375,000.To prevent double taxation and support UAE's global business hub status, the tax regime exempts various income types, including dividends from residents and foreign entities, subject to participation criteria, along with income from non-residents in international transport.Participation criteria for foreign entities include a 12-month holding period, foreign entity tax rate not below 9%, and a limit on ownership interests. Interests below 5% qualify if cost exceeds Dh4 million.Expenses related to exempt income are usually non-deductible, except for interest. They become part of the cost.Parent companies can now form tax groups with resident subsidiaries, consolidating them. Income within the group is disregarded.When a group member gets income from outside, the participation exemption still applies, with adjustments for remaining income and losses. Optimize your tax position in the evolving UAE tax landscape. #UAE #CorporateTax #TaxLaws #TaxExemptions #TaxConsulting

As the tax landscape in the GCC countries is constantly evolving, the GCC Tax Certificate Course provides a fantastic opportunity to deep dive into the region's prominent tax legislations. Check out the details of the course, and we hope to see you there! #Aurifer #GCCtax #Taxcourse

11