Corporate Tax Advisory Services

The UAE’s business outlook transformed in June 2023 with the introduction of corporate tax. This move signals a shift towards a more sustainable economic model, prioritizing fiscal responsibility without sacrificing the country’s growth ambitions.

BCL Globiz, is here to guide you through every step of the process, ensuring full compliance and optimizing your tax position. We provide comprehensive corporate tax advisory services to businesses of all sizes across the UAE, helping you understand your obligations and capitalize on available opportunities.

Businesses operating in the UAE must now understand this new tax environment strategically to ensure continued success. Consulting the tax expert would pave a way for the success of your business

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Understanding UAE Corporate Tax

The UAE Corporate Tax is a federal tax levied on the taxable income of companies and other juridical persons. Here’s a breakdown of key aspects:

Tax Rate:

0%: Taxable income up to AED 375,000
9%: Taxable income exceeding AED 375,000
A different tax rate might apply for large multinationals subject to Pillar Two of the OECD BEPS project.

Taxable Income: This is generally the accounting net profit, adjusted for items specified in the Corporate Tax Law.
Tax Period:  The standard tax period is 12 months.
Filing and Payment:   Businesses are required to register for corporate tax, file tax returns, and pay the tax due within specified deadlines.
Effective Date:   The UAE Corporate Tax is effective for financial years starting on or after June 1, 2023.

Who is subject to Corporate Tax in UAE?

The following entities are generally subject to UAE Corporate Tax:

A. UAE Companies: All companies incorporated in the UAE, including mainland companies, free zone companies, and branches of foreign companies.

B. Foreign Companies: Foreign companies with a permanent establishment (PE) in the UAE or deriving UAE-sourced income.

C. Natural Persons conducting Business: Individuals conducting business or business activities in the UAE that require a commercial license, or undertaking activities which are similar to those undertaken by juridical persons.

Truly Transparent Pricing! No Hidden Fees!

Corporate Tax Compliance

Small Business Corporate Tax Return
(For Small businesses with Revenue less than AED 3 million)

Growth Stage Business Corporate Tax Return
(For businesses with Revenue between AED 3 million to AED 10 million)

Large Stage Business Corporate Tax Return
(For businesses with Revenue more than AED 10 million)

AED 1,050

AED 2,625

AED 4,725

Note:
For businesses opting for Qualified Free Zone Persons (QFZP), contact us directly for the fees. There are additional compliance requirement if you avail QFZP benefit of 0% corporate Tax, you may read the detailed blog here.

Truly Transperant Pricing! No Hidden Fees!

Corporate Tax Compliance

Small Business Corporate Tax Return
(For Small businesses with Revenue less than AED 3 million)

AED 1,050

Growth Stage Business Corporate Tax Return
(For businesses with Revenue between AED 3 million to AED 10 million)

AED 2,625

Large Stage Business Corporate Tax Return
(For businesses with Revenue more than AED 10 million)

AED 4,725

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About our Corporate Tax Services

We offer a complete suite of corporate tax advisory services, including:

Corporate Tax Registration

Assisting with registration for corporate tax with the Federal Tax Authority (FTA).

Impact Assessment

Analysing the impact of the corporate tax law on your business and identifying potential tax planning opportunities.

Tax Planning & Optimisation

Developing tax-efficient strategies to minimise your tax liability while remaining fully compliant.

Compliance Support

Preparing and filing corporate tax returns accurately and on time.

Transfer Pricing Advisory

Assisting with transfer pricing documentation and compliance, including benchmarking studies.

FTA Audit Support

Representing you during FTA audits and resolving any tax-related issues.

The Crucial Role of “Qualifying Free Zone Person” (QFZP) Status

A key aspect of the UAE Corporate Tax regime is the preferential tax treatment for businesses operating in Free Zones. Businesses that meet the criteria to be classified as a “Qualifying Free Zone Person” (QFZP) can benefit from a 0% corporate tax rate on “Qualifying Income.” Qualifying freezone businesses are not subject to the AED 375,000 minimum threshold limit.

Understanding QFZP Requirements

To be a QFZP, a Free Zone entity must meet several conditions, such as:

Maintaining Adequate Substance

Demonstrating sufficient economic activity within the Free Zone. This includes having adequate employees, assets, and operating expenses in the Free Zone relative to the activities being performed.

Deriving Qualifying Income

Generating income primarily from Qualifying Activities. Ensuring non-qualifying revenues do not exceed the de-minimis requirements.

Not Electing to be Subject to Standard CT

Choosing to benefit from the 0% rate by meeting the requirements instead of being subject to the regular 9% corporate tax rate.

Complying with Transfer Pricing Rules

Ensuring that transactions with related parties are conducted at arm’s length & maintains Transfer Pricing Documentation of the UAE Corporate Tax Law.

Meeting Additional Requirements

Complies with any additional requirements that the Minister may impose.

What is Qualifying & Non-Qualifying Revenue?

Qualifying Revenue: Income derived from transactions with other Free Zone Persons, except for income derived from Excluded Activities & Income derived from transactions with a Non-Free Zone Person, in respect of Qualifying Activities alone that are not Excluded Activities. Also include, Any other income provided that the Qualifying Free Zone Person satisfies the de-minimis requirements.

Non-Qualifying Revenue: Non-qualifying revenue is revenue derived from excluded activities and activities that are not qualifying activities carried out by QFZP with Non Free Zone persons. Non-Qualifying Income is taxed at the standard 9% rate.

Note:
A. The de-minimis rule sets a threshold for QFZP’s non-qualifying income at 5% of their total revenue or AED 5 million, whichever is lower.
B. The domestic PE and foreign PE of QFZP would be treated as a separate and independent person, who is related to QFZP. The income attributable to such PE’s shall be considered as Taxable Income and taxed at the rate of 9%.
C. Income attributable to immovable property located in a Free Zone derived from the Transactions with Non-Free Zone Persons in respect of Commercial Property; Transactions with any Person in respect of non-commercial immovable property shall be considered as Taxable Income and taxed at the rate of 9%.
D. For the purpose of determining the de-minimis threshold, in the computation of Total revenue and non-qualifying revenue , the income attributable to points mentioned under Note B & C above, shall not be included.

Qualifying Activities

These are defined by the Ministry of Finance and include activities like:

A. Manufacturing of goods or materials.

B. Processing of goods or materials.

C. Trading of Qualifying Commodities.

D. Holding of shares and other securities for investment purposes.

E. Ownership, management and operation of Ships.

F. Reinsurance services.

G. Fund management services.

H. Wealth and investment management services.

I. Headquarter services to Related Parties.

J. Treasury and financing services to Related Parties.

K. Financing and leasing of Aircrafts.

L. Distribution of goods or materials in or from a Designated Zone.

M. Logistics services.

N. Any activities that are ancillary to the Qualifying Activities specified above.

A Qualifying Free Zone Person can benefit from the 0% Corporate Tax rate if it derives Qualifying Income from transactions in respect of the Qualifying Activities mentioned above(even if such services or goods are sold to Non-Free Zone Persons)

How We Can Help You with QFZP Status

We can assist you in

Determining Eligibility

Assessing whether your Free Zone business meets the criteria to be classified as a QFZP.

Substance Evaluation

Evaluating the adequacy of your substance in the Free Zone and providing recommendations for improvement.

Income Analysis

Analyzing your income streams to determine the proportion of Qualifying Income and Non-Qualifying Income.

Documentation Support

Preparing and maintaining the necessary documentation to support your QFZP status.

Optimization Strategies

Developing strategies to optimize your income streams and ensure that you meet the Qualifying Income requirements.

Standard Tax Rate applicable on FZP other than QFZP

All Free Zone persons that do not meet all the conditions to be a QFZP are subject to tax at the standard rate of 0% on taxable income up to AED 375,000 and 9% for taxable income above AED 375,000. While the 0% tax rate remains a powerful incentive, a clear understanding of eligibility criteria, the “de minimis” rule, and potential tax traps is crucial. With careful planning, informed decision-making, and professional guidance, businesses can continue to harness the advantages of free zones and thrive in the evolving tax landscape of the UAE. Confused about setting up your business and taxes in the Free zone? Get a free consultation with our experts on UAE corporate tax for free zone. We’ll guide you every step of the way.