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How To Compute Your Tax Liability Under UAE Corporate Tax?

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  • Taxation
  • 2023-01-07
  • Mr. Waseem

How To Compute Your Tax Liability Under UAE Corporate Tax?

The United Arab Emirates does not have a corporate income tax currently. However, certain businesses in certain sectors may be subject to tax on their profits. In this blog, we will provide an overview of the tax liability of businesses in the UAE and discuss how to calculate your tax liability.

 

Who is subject to corporate tax in the UAE?

Only certain businesses in certain sectors are subject to corporate tax in the UAE. Specifically, companies engaged in the oil and gas sector, as well as banks and financial institutions, are subject to corporate tax. Companies in other sectors, such as manufacturing, trading, and services, are not subject to corporate tax in the UAE.

 

What is the corporate tax rate in the UAE?

The corporate tax rate for companies in the oil and gas sector is 55%. For banks and financial institutions, the corporate tax rate is 20%.

 

How do you calculate your tax liability?

For calculating your tax liability, you must first find your taxable total income. This is calculated by subtracting any allowable deductions from your total income. Allowable deductions may include expenses such as employee salaries, rent, and utilities.

 

Once you have determined your taxable income, you can calculate your tax liability by multiplying your taxable income by the applicable tax rate. For example, if your taxable income is AED 100,000 and you are a bank or financial institution, your tax liability would be AED 20,000 (100,000 x 0.20).

 

Are there any tax exemptions or incentives available in the UAE?

There are a number of tax exemptions and incentives available in the UAE for businesses. These include:

 

  • Free zone companies: Companies operating in one of the UAE’s many free zones are generally exempt from corporate tax. This includes companies operating in the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

  • Tax Holidays: Some businesses may be eligible for tax holidays, which allow them to defer payment of corporate tax for a certain period of time.

  • Tax Treaties: The UAE has tax treaties with a number of countries, which may provide for reduced corporate tax rates for companies operating in the UAE.

How do you file your corporate tax return in the UAE?

If you are a company that is subject to corporate tax in the UAE, you will need to file a corporate tax return on an annual basis. The deadline for filing your corporate tax return is generally the end of the calendar year.

 

To file your corporate tax return, you will need to complete a tax return form and provide supporting documentation, such as financial statements and receipts for expenses. You will also need to pay any taxes owed at the time of filing. If you have any problems in filling than accounting firms in dubai and UAE like Risiansaccounting can help you with the same. 

 

What are the penalties for failing to pay corporate tax in the UAE?

If you fail to pay corporate tax in the UAE, you may be subject to penalties and interest charges. The amount of the penalty will depend on the severity of the offense and the amount of tax owed.It is important to ensure that you pay your corporate tax on time and in full to avoid penalties. If you are having difficulty paying your corporate tax, you should contact the tax authorities to discuss your options. Get the free consultant from corporate tax expert.

 

Conclusion:- With corporate tax in the UAE is only applicable to companies in the oil and gas sector and banks and financial institutions. To calculate your tax liability, you must determine your taxable income and multiply it by the applicable tax rate. There are a number of tax exemptions and incentives available in the UAE, and it is important to file your corporate tax return on time to avoid penalties.

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