The regulatory environment in the United Arab Emirates (UAE) has undergone a significant transformation aimed at aligning with international transparency standards.
For professionals managing an entity in the region, having accurate information on current tax obligations is essential.
At OMC Group, we present the technical aspects of the current corporate tax regime, facilitating the understanding of the administrative requirements that UAE authorities demand for the maintenance of business operations.
Corporate Tax: Rates and Thresholds
As of June 2023, the UAE implemented a federal Corporate Tax regime. Based on current regulations, the tax structure is defined under the following technical parameters.
When evaluating an entity’s tax position, the following application criteria must be observed:
- 0% Rate: Applicable to taxable net income not exceeding AED 375,000. This measure aims to support small businesses and startups.
- 9% Rate: Applicable to taxable net income exceeding the AED 375,000 threshold.
- Mandatory Compliance: All commercial entities must register with the Federal Tax Authority (FTA) and obtain a Tax Registration Number (TRN), regardless of whether they reach the income threshold or not.
Value Added Tax (VAT) in the UAE
VAT was introduced in the UAE in 2018 as an indirect tax on consumption. According to the current technical information, its application is governed by the following conditions.
Entities must consider these registration and reporting requirements for VAT:
- Standard Rate: A standard rate of 5% applies to most goods and services.
- Mandatory Registration: An entity must register for VAT if its taxable supplies and imports exceed AED 375,000 per year.
- Voluntary Registration: Entities whose supplies exceed AED 187,500 may opt for voluntary registration.
OMC Group’s Role in Compliance Support
Managing an entity in the UAE requires rigorous administration of records and filing deadlines. At OMC Group, we act as technical facilitators, providing information on registration procedures before the FTA and the maintenance of accounting records that meet the required standards.
Our work focuses on providing technical data and administrative support so that professional advisors can ensure that the entity under their management complies with local reporting and transparency regulations.
