How & Where to Pay Corporate Tax in UAE (Latest FTA Rules 2025)
How & Where to Pay Corporate Tax in UAE (Latest FTA Rules 2025)
Blog Article
Governments use corporate taxation, a key instrument to raise money and maintain economic stability, striking a balance between the need for companies to prosper successfully through diversified economies.
The article analyses significant components on how to “Pay Corporate Tax in UAE” which came into effect from June 1, 2023, where operating businesses must adhere with the new tax regulations and understand how to incorporate them in their organizations.
What is Corporate Tax and how to pay it?
Considered as vital source of income for governments, allowing them to efficiently finance public services, Corporate Taxes are levied on net profits which are determined as portion of business taxable income, through subtracting revenue from expenses.
The implementation of Corporate Tax in UAE from June 1, 2023, has represented a major change in nation’s tax LAWs, as long enough the government had been recognized for their tax-free environment.
-Corporate Tax Payment Process
- Registration: Registration Fee applied on businesses operating within UAE mainland and Freezones through the online portal of Federal Tax Authority “https://tax.gov.ae” by presenting documents such as: “Trade-License & Financial-statements.
- Preserve Reliable Financial Records: Maintaining records of Income Statements and Operating Expenses, which adhere to international accounting regulations.
- Prepare Tax-Filling: Financial records based on the business structure, such as: Income and Expenses should be paid in compliance with UAE corporate tax.
- Calculate Taxable Income: After calculating the total revenue within tax-period, businesses should deduct expenses from the collected records by applying the 9% rate if profits are more than AED 375,000.
- File Corporate Tax Returns: Businesses must use the FTA’s online portal to submit corporate taxes annually every 9 months based on the Tax-Period.
- Observe Deadlines: Businesses pay corporate tax within 9 months of the tax-period, as penalties could reach over AED 10,000.
-Corporate Tax Payment Deadline
Payment deadlines are closely aligned with tax-return filling deadlines in UAE, enabling businesses to ensure that they file Tax returns and liabilities to avoid penalties.
1: Filling and Payments Deadline: Within nine months of concluding the tax period, corporate tax returns must be completed, and tax liabilities must be settled. For EG: The payment deadline would be around December 31, 2024, if fiscal year ended on March 31, 2024.
2: Tax Period: A fundamental process which determines the timescale used to compute and report revenues and tax-obligations, essential for adhering to the Federal Tax Laws, implemented within UAE in June 2023.
3: Example of Corporate tax Deadlines:
Can you Pay Corporate Tax in installments?
Around the world, economies have been allowing businesses to pay corporate tax dues in instalments, easing their cash-flow process by the end of the tax year.
However, in the UAE corporate tax rules which came into effect on June 1, 2023, are different from the international systems where businesses are not eligible to pay Corporation Tax in installments, they must pay the full liability on specified deadlines.
Why Installment Payments are not allowed:
1: New Tax Systems: Since FTA is still establishing comprehensive standards in UAE's tax structure, installment payments might be implemented as the system progresses.
2: Low Tax-Rate: The corporate tax rate within the UAE is 9%, making it low compared to other economies, reduces the burden of total payment for most businesses.
3: Simplified Process: With single payment deadline to guarantee compliance and administrative effectiveness, the tax system in the UAE is made to be straightforward.
How much Corporation Tax will I pay:
The corporation tax system in the UAE was recently revised as of June 2023. Companies with profits over AED 375,000 (about USD 102,000) are subject to a 9% federal corporate tax, exempting businesses below this threshold.
-Corporate Tax Rate Breakdown:
- 0% tax on businesses with profits up-to AED 375,000
- 9% on taxable income exceeding AED 375,000
-Applicability:
- Applicable to all businesses operating within the UAE.
- Additional focus on businesses operating within mainland.
-Key Considerations:
- Free-zone businesses may have conditions to maintain their tax-benefits.
- 0% tax on profits for businesses with profits below AED 375,000 and 9% for exceeding limit.
When and Where to Pay Corporate Tax:
The implementation of corporate tax system had been executed from June 1, 2023, where businesses were met with strict deadlines to ensure on-time payments in-order to avoid penalties.
When to Pay Corporate Tax:
Tax Period: This period usually aligns with the fiscal year of the business from January 1 to December 31, based on a 12-month period.
Filling Deadline: The UAE’s tax-authority (FTA) directs businesses to send their corporation tax returns, at the end of fiscal year.
Where to Pay Corporate Tax:
- FTA: In the UAE, the federal tax payments are made through Federal-Tax-Authority (FTA) which involves creating an account and registering a number.
- EmaraTax: A platform for businesses to register for their tax-payments and file-returns.
- Registration: Businesses must register for Corporate Tax with FTA and then obtain a TRN (Tax Registration Number).
Who has to Pay Corporate Tax in the UAE:
1: Mainland Companies: 0% on taxable income of AED 375,000 and 9% above the rate.
2: Multinational Companies (MNEs): Foreign branches of international companies are subject to 15% minimum tax if profits exceed the threshold of AED 375,000.
3: Freezone Companies: Businesses operating within this sector may also be liable for taxes if their profits exceed AED 375,000.
4: Foreign Companies: Only income derived from operations in UAE is subject to taxation.
Final Thoughts:
In conclusion, “How and Where to Pay Corporate Tax in UAE” is a straightforward procedure as companies must have deep understanding of the evolving legislative environment to navigate their corporate tax obligations which is essential to avoiding fines and guaranteeing smooth operations.
How SimplySolved can Help
SimplySolved presents organizations with smooth corporate tax payment solutions by providing clear instructions on “How and Where to pay Corporate Tax in the UAE,” using their user-friendly platform that help businesses adhere towards the corporation tax LAWS which saves time. Contact us today to expediate your tax procedures and stay ahead of the modifying tax environment. Report this page