- Taxation
- 2023-04-20
Guide On UAE Corporate Tax on State Sourced Income
The United Arab Emirates or UAE is a popular place for foreign investors to go when they want to find ways to get money. It's easy to see why, since the country has low taxes and is known as a business powerhouse. But the UAE just put in place a new Corporate Tax system that applies to all businesses in the country, whether they are based there or not. This guide will give you an overview of the UAE Corporate Tax on state-sourced income. State-sourced income is money that a business makes from doing business in a certain emirate.
What is UAE Corporation Tax?
Corporate Tax in UAE is a tax that companies and businesses have to pay on their profits. The UAE passed the Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses on December 9, 2022. This law, which will be called the "Corporate Tax Law" from now on, goes into effect for financial years that start on or after June 1, 2023.
The goal of putting in place Corporate Tax is to help the UAE reach its strategic goals and speed up its growth and change. Together, the UAE's large number of double tax treaties and the certainty of a competitive Corporate Tax regime that meets international standards will cement the UAE's position as a top place for business and investment.
The Corporate Tax Law is the legal basis for introducing and enforcing a Federal Corporate Tax (also called a "Corporate Tax") in the UAE. It is based on the best practices around the world and includes principles that are known and accepted around the world.
Who has to pay Corporate Tax in UAE?
According to the Corporate Tax Law, Corporate Tax must be paid by anyone who runs a business in or outside of the UAE through a permanent establishment (PE) in the UAE. A person can either live in the UAE or not live there.
A resident person is a legal person that is incorporated or registered under the laws of the UAE or any of its emirates, or has its place of effective management in the UAE. Anyone who is not a resident person is a non-resident person.
A PE is a fixed place of business where a person does all or part of their business in the UAE. This could be a branch, office, factory, workshop, mine, oil or gas well, or any other place where natural resources are taken out of the ground. A PE also comes with:
- A place where a person provides services through employees or other staff for more than 183 days in a 12-month period;
- A person who is acting on behalf of someone else and has the power to sign contracts in their name or usually does so;
- A person who owns at least 10% of another person who does business in the UAE;
- A person who works in business with someone else who has a PE in the UAE and does tasks that complement what that other person does.
What is state sourced income?
State-sourced income in UAE is the money a business makes from doing business in a certain emirate. This could include money made from selling goods or services, getting rent from properties in the emirate, or making money in other ways in the emirate.
How to easily clear your corporate tax?
If you are looking for an easy way to clear your corporate tax then an audit firm in UAE like Risiansaccounting will assist you with it!
Conclusion:- Looking forward to understand state sourced income than this post is for you and companies like Risians Accounting can act as your accounting firm in Dubai, UAE for your tax buddy!
