How to Minimize Your UAE Corporate Taxes

Corporate taxes law UAE are generally low compared to other countries. The UAE is one of the few countries in the world with no federal corporate tax law UAE. However, this year, i.H. introduced a minimum corporate tax law UAE, starting in 2023, for companies that generate income domestically. Therefore, it is natural that companies can aim to reduce the UAE corporate tax law burden by properly complying with the corporate tax law UAE.

UAE Corporate Tax Law

Corporate tax law UAE will be introduced in the UAE on 1 June 2023, with a standard tax rate of 9% for companies with an income of AED 375,000 or more. The UAE’s corporate tax law incorporates leading tax practices aimed at the country’s economic development, helping businesses comply with international standards and avoiding illegal tax practices.

The introduction of a corporate tax is aimed at helping the UAE achieve its strategic goals and accelerate its development and transformation.

UAE Corporate Tax Rate

UAE companies and taxpayers are subject to a certain percentage of corporate tax law UAE, known as the income tax rate. The applicable CT rates for UAE companies are quite affordale.

In addition, all MNCs are subject to the OECD’s Base Erosion and Profit Sharing Act and fall under Pillar 2 of the BEPS 2.0 framework. H. Global turnover in excess of AED 3.15 billion with a corporate tax rate of 15%. Despite the low tax rate, companies can take steps to reduce their tax law burden.

How Can I Reduce Corporate Tax Law UAE?

UAE companies can reduce UAE corporate tax law by structuring their operations, taking advantage of tax incentives and exemptions, and maximizing deductions. You must also comply with UAE tax laws. Failure to comply with regulations can result in significant fines and corporate tax penalties.

Therefore, rely on her FTA registered tax accountants. Auditing with the best corporate tax advisors in the UAE, for assistance with corporate tax law UAE compliance and filing of CT returns. Under the Corporate Income Tax Law, the UAE government offers various tax exemptions and incentives to companies engaged in certain industries. Companies can benefit from these exemptions and incentives by ensuring they meet the eligibility criteria and applying to the relevant authorities.

This Minimizes The Amount Of Corporate Tax Law UAE Levied On The Company.

1. Take Advantage Of Tax Exemptions And Incentives

The UAE government offers tax exemptions and incentives for companies engaged in certain industries. For example, government agencies, resource companies, non-extractive companies, and non-profit organizations can benefit from tax exemptions and incentives. Businesses operating in the Dubai International Financial Center (DIFC) can also benefit from tax exemptions and incentives.

The Treasury Department also recently released a clarification on its decision on corporate income tax exemption for eligible non-profits.

To take advantage of these exemptions and incentives, businesses must ensure they meet eligibility criteria. These exemptions and incentives must also be applied to the relevant authorities.   

2. Organize The Company Correctly

Proper organization of a company can provide several benefits beyond reducing tax liability. Establishing a subsidiary in a free zone not only allows companies to benefit from free zone corporate tax law UAE incentives but also facilitates their business activities in certain areas. The UAE free trade zone offers a range of incentives beyond tax exemptions, including streamlined customs procedures, simplified regulations, and access to world-class infrastructure.

Alternatively, companies can consider setting up branches in free zones. Unlike a subsidiary, a branch is not considered a separate legal entity but an extension of its parent company.

The parent company, therefore, bears the tax liability of the branch. However, branches can still benefit from free zone tax benefits and operate under the parent company’s brand and reputation.

In Addition

In addition, under the Corporate Income Tax Act, eligible free zone individuals are subject to 0% UAE tax law on their income when conducting transactions with various free zone companies or companies located outside the UAE.

Companies need to consider many factors when determining the best structure for their business, including the nature of their business, transactions, growth plans, and long-term goals. You should also seek legal and tax professional advice to ensure compliance with UAE regulations and laws.

3. Maintaining Financial Records

Maintaining financial records allows you to claim deductions for business expenses, which can reduce a company’s taxable income and, in turn, reduce its UAE corporate tax law burden. It also helps businesses defend their tax position in the event of an audit by tax authorities.

We at BMS Auditing help prepare and produce the best financial audit reports for multinational corporations and all corporate organizations.

4. Appoint A UAE-Registered Tax Agent.

Hiring a good tax advisor who has many years of experience in the UAE and who is also registered with the FTA (for reference, not all tax advisors are registered) can help you achieve the best possible tax practice. Our tax accountants are familiar with corporate tax law and can help you find the best solution for tax compliance.

Auditing is an FTA-accredited audit and tax firm, registered tax advisor, and corporate tax advisor in the UAE to support businesses and entrepreneurs.

5. Timely Filing And Payment Of UAE Corporate Tax Law Returns

It is more important to file UAE tax law and pay off your tax liability. If you do not meet this deadline, you may have to pay additional overdue interest and possibly even fines or fines. Companies can avoid hasty tax filings and surcharges by collecting documents well in advance of the end of the fiscal year.

We always recommend judicious use of tax incentives and proper compliance to minimize a company’s tax liability. Failure to do so may result in penalties and fines, as well as legal action by the government itself. Therefore, it is better to turn to a certified tax firm like finance monkey Auditing.  

6. Tax Incentives Need To Be Chosen Carefully

It’s important to make an informed decision when applying for a tax credit. For example, it is more beneficial to the overall tax situation to spread the cost of purchasing machinery and equipment over several tax years than to deduct the total purchase price in a single fiscal year.

Uae Corporate Tax Law Advisor

Reducing the corporate tax law UAE burden is an important consideration for companies doing business. FM Auditing is Dubai’s top audit firm and the best tax firm in the Middle East. With a team of tax advisors, auditors, and corporate tax advisors in the UAE, we help companies reduce their corporate tax burden by providing expert advice on tax planning, optimization, compliance, and reporting. They help businesses structure their deals in a tax-efficient manner, ensure compliance and avoid penalties. 

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