Tax services

Whether you are a small business or a multinational corporation, Square International Auditing is your reliable partner for all your corporate tax advisory needs in the UAE

Corporate tax is a form of direct tax levied on the net income or profit of corporations and other entities from their business.

The introduction of Corporate Tax (CT) in the UAE serves several objectives. Firstly, it aims to solidify the UAE’s position as a prominent global hub for business and investment. Additionally, it seeks to expedite the country’s development and transformation in order to achieve strategic objectives. Furthermore, the implementation of CT demonstrates the UAE’s commitment to adhering to international standards for tax transparency and preventing harmful tax practices.

The scope of CT encompasses all businesses and individuals engaged in commercial activities under a valid license in the UAE. This includes free zone businesses, which will continue to receive the current CT incentives as long as they comply with regulatory requirements and do not conduct business outside of the UAE mainland. Foreign entities and individuals will only be subject to CT if they engage in ongoing or regular trade or business activities within the UAE. Banking operations, as well as businesses involved in real estate management, construction, development, agency, and brokerage activities, are also within the scope of CT.

Certain exemptions from CT exist.

 Businesses engaged in the extraction of natural resources will remain exempt from CT, as they will continue to be subject to the existing Emirate level corporate taxation. Dividends and capital gains earned by a UAE business from qualifying shareholdings will also be exempt from CT. Additionally, qualifying intra-group transactions and reorganizations will not be subject to CT, provided that all necessary conditions are met.

In addition, it should be noted that the following exemptions apply to CT:

• An individual’s salary and other employment income, regardless of whether it is received from the public or private sector.
• Interest and other income earned by individuals from bank deposits or saving schemes.
• Income earned by foreign investors from dividends, capital gains, interest, royalties, and other investment returns.
• Real estate investments made by individuals in their personal capacity.
• Dividends, capital gains, and other income earned by individuals from owning shares or other securities in their personal capacity.

The CT rates, as stated by the Ministry of Finance, are as follows:

• 0 percent for taxable income up to AED 375,000.
• 9 percent for taxable income above AED 375,000.
• A different tax rate for large multinationals that meet specific criteria set with reference to ‘Pillar two’ of the OECD Base Erosion and Profit Shifting Project, which has not yet been specified.

The Federal Tax Authority (FTA) is responsible for the administration, collection, and enforcement of the CT. For more information on corporate tax, as well as guidance on how to register and file returns, please refer to the FTA’s website.

Corporate tax management need not be a source of concern. With Square International Auditing & Advisory as your partner, you can streamline your corporate tax responsibilities with confidence. Whether you require support with corporate tax registration or filing, our team is prepared to assist your business at every stage. Reach out to us today to learn more about our Corporate Tax services and discover how we can help your business excel in corporate tax compliance and optimization in the UAE.

Excise Tax Services

Excise tax is a type of indirect tax imposed on specific goods that are considered harmful to human health or the environment. In the United Arab Emirates, excise tax was introduced on October 1, 2017, as part of the country’s efforts to diversify revenue sources and promote healthier lifestyles.

Excise Taxable Goods

In the UAE, excise tax is primarily applied to three categories of goods:

1. Tobacco Products: This includes cigarettes, cigars, and other tobacco-related products.
2. Carbonated Drinks: Any non-alcoholic beverage containing added sugar or sweeteners is subject to excise tax. This category mainly targets carbonated soft drinks.
3. Energy Drinks and Electronic Smoking Devices: Energy drinks and electronic smoking devices, such as e-cigarettes, are also subject to excise tax.

Consumer Impact

The introduction of excise tax in the UAE has led to increased prices for excise taxable goods. This was done to discourage the consumption of harmful products and promote healthier choices among consumers. It also contributes to government revenue, which can be invested in various public services and infrastructure projects.

Economic Substance Regulations

When it comes to conducting business in the United Arab Emirates (UAE), understanding and adhering to Economic Substance Regulations (ESR) is essential. ESR is a framework of rules and guidelines designed to ensure that companies in the UAE engage in substantive activities, in line with international standards, all while preserving economic transparency.

The Significance of UAE ESR

ESR carries paramount significance in the UAE by aligning the nation with international best practices. It promotes economic transparency and ensures that businesses operating in the UAE are substantially engaged in activities. Moreover, these regulations are aimed at deterring harmful tax practices, which, in turn, fortify the UAE’s stature as a global business hub.

Who Must Comply with ESR?

It’s worth noting that ESR isn’t universal; it applies predominantly to licensees participating in specific activities. Some entities may qualify for exemptions. Understanding your responsibilities under ESR is fundamental to ensure your business remains in compliance.