Will businesses be required to pay CT tax in advance? Are there any consequences for non-compliance under the CT regime?
UAE businesses will not be required to make advance UAE CT payments.
Similar to other taxes in the UAE (e.g. VAT), businesses will be subject to penalties for non-compliance with the CT regime.
Further information on the UAE CT compliance obligations and applicable penalties will be released in due course by FTA.
How often will UAE businesses need to file a UAE CT return? Will it need to be filed electronically?
Only one CT return will need to be filed per financial period .No provisional or advance CT filings will be required. A financial period is generally a year.
The CT return will need to be filed electronically. Further guidance will be issued in this regard in due course.
What is the withholding tax rate under the UAE CT regime? Will foreign CT paid on UAE taxable income be recognised under the UAE CT regime?
Withholding tax is tax collected at source by the payer on behalf of the recipient of the income Withholding taxes exist in many tax systems and are typically used in respect of dividends, interest, royalties and similar payments. UAE withholding tax will not be applicable on domestic and cross-border payments of any nature under the UAE CT regime.
Foreign CT paid on UAE taxable income will be allowed as a tax credit against the UAE CT liability.
Will a group of UAE companies be able to form a “fiscal unity” for UAE CT purposes?
A UAE group of companies can elect to form a tax group and be treated as a single taxable person, provided certain conditions are met
A UAE tax group will only be required to file a single tax return for the entire group.
Will the UAE CT regime allow prior year losses to reduce future taxable income?
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 taxable 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.
Tax losses from one group company may be used to offset taxable income of another group company, provided certain conditions are met.
Further information on the group loss utilisation rules will be provided in due course by FTA.
Will the oil and gas sector and other extractive industries be subject to the UAE CT regime? Will the banking or real estate sector be subject to the UAE CT regime?
Businesses engaged in the extraction of natural resources will remain subject to Emirate level corporate taxation and be outside the scope of the UAE.
Banking operations will be subject to UAE.
Businesses engaged in real estate management, construction, development, agency and brokerage activities will be subject to UAE CT.
Will a free zone business be subject to UAE CT?
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 company established in a free zone will be required to register and file a CT return. Further details on the compliance obligations will be provided in due course
Will a foreign company or individual be subject to UAE CT? Will income earned by a foreign investor be subject to UAE CT?
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
Will intra-group transactions be exempt from UAE CT?
Qualifying intra-group transactions and reorganizations will not be subject to UAE CT provided the necessary conditions are met
Will anyone or any income be exempt from UAE CT?
Businesses engaged in the extraction of natural resources will remain subject to Emirate level corporate taxation and be outside the scope of UAE CT.
Dividends and capital gains earned by a UAE business from its qualifying shareholdings will be exempt from UAE CT.