The Dubai International Financial Centre. ARCHIVE

The UAE will impose administrative penalties for violations of the Corporate Tax Law starting August 1, according to a UAE Cabinet decision. The UAE’s Ministry of Finance announced that the Corporate Tax Law Penalties have been “carefully designed to ensure compliance of the Corporate Tax Law without burdening UAE businesses that comply with the new regulations”. Under the Cabinet decision, penalties will be imposed on “taxable persons, whether an individual or legal entity, who do not comply with their obligations under the UAE Corporate Tax Law. Corporate Tax was enforced in the UAE starting on June 1. Penalties will be applied in cases of failure to file and pay Corporate Tax on time, including the failure of the registrant to inform the Federal Tax Authority (FTA) of any case that may require the amendment of the information pertaining to his tax record kept by the FTA. Penalties also apply in cases of failing to properly keep records or submitting the required records and other information specified in the tax law.

Who are subject to UAE Corporate Tax?

The Ministry of Finance reiterated that corporate tax will be set at 9 percent for taxable business profits that exceed Dh375,000. Business with profits at Dh375,00 or less will not be taxed as part of the UAE’s support for small businesses and start-ups.

Who are exempted from Corporate Tax?

Businesses exempt from corporate tax include those engaged in natural resource extraction. However, they remain subject to existing local emirate-level taxation. Government entities, pension funds, investment funds and public benefit organisations are also exempted from corporate tax. Existing free zone entities will also be eligible for 0 percent corporate tax rate on qualifying income.

Will Corporate Tax be applied on salaries?

Corporate tax will not be applied to salaries or other personal income from employment, whether it is earned from work in the government, semi-governmental or private sector. Interest and other personal income earned from bank deposits or savings programmes are also not subject to Corporate Tax, as well as investment in real estate by individuals in their personal capacity. ICA/Expat Media
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