VAT & TAX
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Business income earned under a commercial license will be within the scope of UAE CT
| The investment in real estate by individuals in their personal capacity should not be subject to UAE CT provided the individual is not required to obtain a commercial license or permit to carry out such activity in the UAE |
Individuals will not be subject to UAE CT on dividends, capital gains and other income earned from owning shares or other securities in their personal capacity
UAE CT will generally apply to income earned from activities carried out under a freelance license / permit, albeit no CT will be payable unless the annual net income of the freelance professional exceeds AED 375,000 (see below)
Interest and other income earned by an individual from bank deposits or saving schemes will not be subject to UAE CT
The CT liability will be calculated as follows:
Taxable income of AED 0 – AED 375,000 at 0% = AED 0
Portion of taxable income exceeding AED 375,000 (i.e. AED 400,000 – AED 375,000 = AED 25,000) at 9% = AED 2,250
The UAE CT liability for the year will be AED 0 + AED 2,250 = AED 2,250
The final amount of UAE CT payable will be reduced by any foreign taxes incurred on the relevant income (see below under ‘Tax Credits’ section)
Businesses engaged in the extraction of natural resources will remain subject to Emirate level corporate taxation and be outside the scope of UAE CT
Information on other UAE CT exemptions and exclusions will be provided in due course
Dividends and capital gains earned by a UAE business from its qualifying shareholdings will be exempt from UAE CT
| A qualifying shareholding refers to an ownership interest in a UAE or foreign company that meets certain conditions to be specified in the UAE CT law |
| Qualifying intra-group transactions and reorganizations will not be subject to UAE CT provided the necessary conditions are met |
If a foreign company or individual is engaged in a business in the UAE in an ongoing or regular manner, they will be subject to UAE CT
UAE CT will generally not be levied on a foreign investor’s income from dividends, capital gains, interest, royalties and other investment returns
Free zone businesses will be subject to UAE CT, but the UAE CT regime will continue to honour the CT incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE
A business established in a free zone will be required to register and file a CT return
Further details on the compliance obligations of free zone businesses will be provided in due course
The UAE CT treatment that will apply to businesses in free zones will be the same across all free zones
Businesses engaged in the extraction of natural resources will remain subject to Emirate level corporate taxation and be outside the scope of the UAE CT
Banking operations will be subject to UAE CT
Further details on the current Emirate level corporate taxation will be provided in due course
Businesses engaged in real estate management, construction, development, agency and brokerage activities will be subject to UAE CT
The UAE CT regime will allow a business to use losses incurred (as from the UAE CT effective date) to offset taxable income in subsequent financial periods
A loss for CT purposes (tax loss) would arise when the total deductions the businesses can claim are greater than the total income for the relevant financial period
Excess tax losses may be carried forward and used against taxable income in future years, provided certain conditions are met
Further information on the UAE CT loss carry-forward rules will be provided in due course