Corporate tax –Article 44 calculation and settlement of corporate tax


Introduction of corporate tax (CT) in UAE that will be effective from 1 June 2023.

Just a brief about corporate tax –it is a direct tax that will be levied on annual taxable profit which is above AED 375,000/- for the business registered in UAE. And Rates are defined as 0% on annual taxable profit below AED 375,000/- and if the taxable profit is above AED 375,000 it will be charged at 9 %.

So, let us understand Article 44- which is the calculation and settlement of Corporate Tax. To understand this we should be aware of Article 46- withholding tax, Article 47-foreign tax credit, and Article 48-deadline for filing Corporate Tax returns.

The details of the above description are as below:-

Article 46-Effect of withholding tax for corporate tax in UAE:

If a person becomes taxable during a Tax period, then the corporate tax payable will be reduced by withholding tax credit for that tax period, if any.

The maximum Withholding Tax can be adjusted with the Corporate Tax payable for the particular tax period, the lowest of the Withholding Tax credit, or the Corporate Tax payable. Any excess Withholding Tax credit cannot be carried forward and the taxable person can apply for a refund from the authority.

Article 47-Foreign tax credit under the corporate tax

Foreign tax Credit is the amount that is already paid on the income as per the foreign jurisdiction. It can be deducted from the corporate tax payable as per the specified Conditions from the authority.

The foreign tax credit can be utilized as below:

The amount of foreign tax credit for the applicable tax period can be deducted from the corporate tax payable for the same tax period.

Foreign tax credits adjusted for the particular tax period should not be exceeded the corporate tax payable for the same tax period.

Also to be noted any unutilized foreign tax cannot be taken forward or carried back and to take benefit of foreign tax credits it is mandatory that they should maintain proper documents and necessary records which are used to claim the foreign tax credit.

Article 48- Corporate tax payment

Any corporate tax payable should be settled in the coming 9 months from the end of the relevant tax period.

Article 49- Corporate tax Refund

Any refund to be can be applied if paid in excess of withholding tax during the taxable period and also if they have paid excess corporate tax. The refund application will be subject to review and approval by the authority.

We have a team of experienced tax consultants, who will be able to advise and provide guidance related to any changes happening in the UAE.

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