The UAE has long been a 0 per cent corporate tax jurisdiction which is now set to change with the release of a public consultation document on the planned introduction of corporate tax (CT) for financial years starting on or after June 1, 2023. As per the document, the CT regime is expected to be residence-based, taxing the worldwide profits of UAE resident businesses and UAE-sourced business’ income of non-residents. It further outlines that dividends and capital gains will be exempt subject to shareholding of at least 5 per cent, and the foreign subsidiary is taxed at least 9 per cent corporate tax (or equivalent).
This consultation document gives rise to several critical questions that need to be answered by the businesses, such as:
• When businesses have complex or diverse organisational structure set up across mainland, free zone, GCC, non-GCC, connected with subsidiaries, branches, holding company and other companies from the same group, etc., how are the subject revenues affected by corporate tax law?
• For cross border businesses selling in the UAE, the company needs to evaluate as to whether a permanent establishment exists and the obligations thereon for corporate tax purposes.
We, at AJMS, can facilitate this tax transformation process and are well positioned in this regard to support our clients in the UAE. Our team of experts have hands-on experience of corporate tax implementation in the GCC and international markets and have also leverage technology to provide end to end solutions for our clients. Our integrated approach supports our clients at each stage of their tax transformation including, but not limited to as follows:
Gap assessment phase - Conducting a detailed impact assessment of their current businesses (qualitative and quantitative) with regards to financial, legal and operational perspective.
Design phase – Conducting detailed analysis and planning of the key areas of consideration for smooth implementation.
Implementation phase – Supporting in the implementation of the new CT regime including selection of IT tool or existing system transformation as well as training.
For more information, please contact: tax@ajmsglobal.com or call us at +971 4 554 2733.
