Corporate Tax and VAT Services in the UAE
The UAE has undergone significant changes in its taxation system, introducing Corporate Tax and refining VAT regulations to align with international standards. At Zeo, we offer comprehensive tax and VAT services to help businesses navigate compliance, registration, and regulatory requirements efficiently.
Corporate Tax in the UAE
On January 31, 2022, the UAE made a significant move by introducing a Corporate Tax. Historically, the UAE didn’t tax corporate profits, with exceptions for certain industries such as resource extraction and foreign banks. Starting from June 1, 2023, a 9% Corporate Tax will be applied to taxable profits exceeding AED 375,000. This means businesses now need to register and comply with the new tax laws by filing the appropriate tax returns. Familiarity with these Corporate Tax regulations is essential for businesses operating in the UAE to ensure compliance and smooth operations.
Corporate Tax Registration & Compliance in the UAE
Businesses operating in the UAE must register for Corporate Tax based on specific criteria set by the Federal Tax Authority (FTA). The registration process involves:
| 1 | Determining tax eligibility based on taxable income. |
| 2 | Submitting an online registration application via the FTA portal. |
| 3 | Providing required business documentation. |
| 4 | Obtaining a Tax Registration Number (TRN). |
| 5 | Filing periodic tax returns and maintaining accurate financial records |
Criteria for Registering for Corporate Tax
- Businesses with taxable income exceeding AED 375,000.
- Free Zone businesses that do not meet exemption criteria.
- Foreign businesses generating taxable income in the UAE.
- Natural persons engaged in business activities with income exceeding AED 375,000.
- Multinational enterprises (MNEs) subject to the new 15% Domestic Minimum Top-up Tax (DMTT) starting January 1, 2025, as per the OECD global tax agreement.
Key Insights Specific to Corporate Tax in the UAE
- The UAE’s corporate tax rate is set at 9%, ensuring a business-friendly environment.
- Small businesses with profits below AED 375,000 are exempt from Corporate Tax.
- Free Zone businesses may qualify for a 0% corporate tax rate if they meet exemption conditions.
- The UAE will implement a 15% minimum tax in 2025 for large multinational enterprises under the OECD’s BEPS Pillar Two framework.
- Failure to comply with Corporate Tax regulations can result in heavy fines and penalties.
Value Added Tax (VAT) in the UAE
VAT was introduced in the UAE on 1 January 2018 at a standard rate of 5% on most goods and services. VAT serves as a key revenue stream for the UAE government and applies to businesses that meet the taxable turnover threshold.
VAT Registration and Compliance in the UAE:
| 1 | Businesses must assess their VAT eligibility based on taxable turnover. |
| 2 | Register for VAT through the FTA online portal. |
| 3 | Obtain a VAT Registration Number (TRN). |
| 4 | Issue VAT-compliant tax invoices. |
| 5 | File VAT returns quarterly or monthly, depending on the business size. |
| 6 | Maintain VAT records for at least five years for compliance |
Criteria for Registering for VAT
- Businesses with annual taxable supplies exceeding AED 375,000 (mandatory registration).
- Businesses with annual taxable supplies between AED 187,500 and AED 375,000 (voluntary registration).
- Companies importing taxable goods and services into the UAE.
- Companies that require VAT compliance for business-to-business (B2B) transactions.
Required Documents for VAT Registration
- Trade license copy
- Passport and Emirates ID copies of business owners
- Bank account details
- Memorandum of Association (MOA)
- Company financial statements
- Business activity details and revenue projections
Key Insights Specific to VAT in the UAE
- VAT applies to most goods and services at a standard rate of 5%.
- Certain goods and services (such as healthcare, education, and real estate) may be exempt or zero-rated.
- Businesses must file VAT returns quarterly or monthly, depending on turnover.
- Failure to comply with VAT regulations can lead to penalties and fines.
- In November 2024, the UAE introduced over 30 amendments to VAT laws, including:
- New VAT provisions for virtual assets and cryptocurrencies.
- Expanded real estate regulations to cover a broader range of transactions.
- Refined financial services exemptions.
- Updated voluntary VAT registration and deregistration criteria.
Get Started with ZEO Today
Stay compliant with UAE tax laws and avoid penalties by partnering with our experienced tax consultants. Contact us today for professional assistance!