Tax compliance: best practices to stay on the right side of the law

The tax landscape is constantly evolving in the UAE. It has recently been deeply changed by the arrival of the new Corporate Tax. How to stay informed of the latest changes? What are the tax compliance best practices to avoid fines which amounts can reach several thousands of dirhams?

Here are some of our tips to save money and time.

Corporate Tax for Free Zone

It is advised that free zone businesses adequately prepare for the coming change in corporate tax law. Indeed, as they are not exempt from the new policy, it may directly affect income as of June 1, 2023. The government-issued Public Consultation Document provides guidance on relevant information for free zone businesses and is useful for those looking to improve their corporate tax readiness.

UAE’s New Corporate Tax law

The United Arab Emirates Ministry of Finance recently announced the long-awaited Corporate Tax Law, set to take effect from the beginning of the financial year, June 1 2023.

The UAE’s new standard corporate tax rate of 9% is reportedly the lowest rate within the GCC region, beneath Qatar and Oman’s rates of 10% and 15% corporate income tax respectively.

The Corporate Tax will only be levied on taxable income exceeding AED 375,000. Incomes below this threshold will be subject to 0% corporate tax.

The objective of this tax is to aid the UAE in the acceleration of its economic development and transformation. It will also allow the country to meet international tax standards. Furthermore, the nation will solidify its position as a leading jurisdiction, centre for global investment and business hub.