What is the impact of Corporate Tax in UAE?

One of the reasons for the introduction of corporate tax in the UAE is the OECD’s Pillar Two initiative to establish a global minimum tax regime. For Indian multinationals, this will have a big impact as the UAE aligns its tax framework with global standards and reduces the incentive for businesses to shift profits to low tax jurisdictions.

Do taxpayers need to consider whether intra-group loan arrangements are at arm’s length?

Yes. Transfer pricing rules apply to all transactions with Related Parties. So any loan provided by an Indian parent company to its UAE subsidiary or vice versa, must be at arm’s length. This means the terms like interest rate and duration should be comparable to that of a transaction between unrelated parties.

What documentation should be maintained for transfer pricing?

Businesses need to keep records of their transactions with Related Parties and Connected Persons. For some businesses this documentation needs to be submitted with their tax return. But businesses that qualify for small business relief are exempt from these transfer pricing documentation rules. Some businesses might also be asked to maintain a master file and a local file.

Do transactions in a Tax Group need to comply with transfer pricing rules?

Transactions between members of the same Tax Group are eliminated in the consolidated financial statements and are therefore generally exempt from transfer pricing rules. An exception to this is when a member of the Tax Group needs to calculate its standalone Taxable Income, for example, to use Tax Losses that were incurred before it joined the group.

Will a change in ownership of the taxable person restrict the ability to use its tax losses?

Tax losses can be carried forward without any time limit as long as the same person or group of people continues to own at least 50% of the entity. If there is a change in ownership of more than 50%, tax losses can still be carried forward if there is no significant change in the nature or conduct of the entity’s business.

Will there be any relief available for transfers between group companies?

Yes, companies that are part of a ‘Qualifying Group’ can transfer assets and liabilities among themselves at their net book value. This is a tax neutral transfer, meaning it will not result in a taxable gain or loss.

Can foreign entities be part of a Tax Group?

No, a foreign entity like an Indian parent company cannot be part of a UAE Tax Group. Only juridical persons that are residents of the UAE can form or be part of a Tax Group. A foreign entity can only be included if it is managed and controlled from within the UAE and is therefore considered a UAE resident for Corporate Tax purposes.

UAE Corporate Tax Pre-Assessment for Indian Companies

Corporate Tax Assessment in UAE

An UAE Corporate Tax Assessment is crucial for USA businesses to understand the exact implications of the new Corporate Tax on their operations. It is a structured analysis of how Corporate Tax will impact your operations, business strategy and financial position in the UAE. This assessment is required for your company to plan for tax, potential business restructuring and to be fully tax compliant. A Corporate Tax Assessment also enables USA owned businesses to proactively adapt to the new Corporate Tax regime in the UAE.

Impact Assessment

Corporate Tax Assessment in UAE for Australian Businesses

A Corporate Tax Impact Assessment is essential for Australian businesses planning to expand into Dubai or anywhere in the UAE. It helps evaluate how UAE’s corporate tax laws, regulations, and policies can affect your company’s financial performance and growth strategy.

For Australian entrepreneurs and companies, this process includes:

Identifying potential corporate tax risks and opportunities within the UAE market
Reviewing your existing tax structure from both Australian and UAE perspectives
Developing strategic tax planning solutions to optimize profits and ensure compliance

The primary goal of a Corporate Tax Assessment is to help Australian businesses make informed financial decisions, enhance tax efficiency, and stay fully compliant with the UAE’s Corporate Tax Law. By understanding the true impact of corporate taxation, your business can minimize liabilities, leverage available exemptions, and build a strong foundation for sustainable success in the UAE.

Partner with Flyingcolour® Tax Consultant LLC for expert corporate tax advisory and assessment services tailored to Australian companies expanding into Dubai or across the UAE.

Aspects of Corporate Tax Impact Assessment

Tax compliance: Assessing your company’s compliance with the tax laws and regulations in the UAE.

Tax planning: Identifying opportunities for your USA owned business to minimize tax liabilities and maximize tax benefits, such as claiming eligible tax credits and deductions.

Transfer pricing: Reviewing your company’s transfer pricing policies to ensure compliance with tax laws in the UAE, particularly with regards to the transfer of goods, services and intellectual property between your UAE entity and related entities in USA

Tax incentives and exemptions: Checking your company’s eligibility for any tax incentives or exemptions offered by the UAE government, such as the benefits of a free zone status.

Business structures: Evaluating your company’s current business structure and considering necessary changes that may be required to minimize tax liabilities and maximize tax benefits.

International tax considerations: Analyzing the impact of cross border transactions on your company’s tax position and ensuring compliance with international tax laws, including the USA-UAE Double Taxation Avoidance Agreement (DTAA).

Document Assessment

American owned businesses in the UAE are required to maintain all financial and other records to comply with Corporate Tax document requirements. Failure to meet these requirements will result in Corporate Tax penalties imposed by the authority. Companies must keep the files and records that support the information on the UAE Corporate Tax return and any other documents filed with the FTA.

Compliance Assessment

The UAE Corporate Tax regime is based on the concept of self-assessment. This means USA businesses must ensure their tax returns and schedules are correct, accurate and in accordance with the UAE Corporate Tax Law. Companies should be aware that the FTA may review the filed Corporate Tax returns and provide its own assessment.

Taxpayers can however appeal an amended business tax assessment issued by the Authority. So businesses can appeal and revise any adjustments to ensure Corporate Tax compliance.

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Service Spectrum

To ensure the success of Indian businesses in the UAE, Flyingcolour® Tax Consultant and J N J Auditing LLC deliver a diverse array of professional services, all executed by our highly experienced team. Our support encompasses fundamental financial management, including accounting, bookkeeping, and comprehensive auditing, alongside strategic tax advisory. We are also adept at navigating the UAE's regulatory framework, offering expert guidance on Economic Substance Regulations (ESR), Anti-Money Laundering (AML) compliance, excise tax, and obtaining tax residency certificates. Our operational support services, such as payroll management and virtual CFO functions, are designed to streamline your business. We pride ourselves on creating comprehensive and customized service packages that are built to address the specific needs of each client.

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Corporate Tax Assessment in UAE

Different processes of Corporate Tax Pre-Assessment

Impact Assessment

Document Assessment

Compliance Assessment

Impact Assessment

Corporate Tax Assessment in UAE for Australian Businesses

Aspects of Corporate Tax Impact Assessment

Document Assessment

Compliance Assessment

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