7 February 2022
UAE Introduces Corporate Income Tax
 
Overview
As expected, United Arab Emirates (UAE) have announced the introduction of Corporate Income Tax on 31 January 2022. As a signatory to the Two Pillar package driven by the Organisation for Economic Co-operation and Development (OECD), UAE has introduced the Corporate Tax (CT) in line with the Global Minimum Tax Proposal under Pillar 2.
Features
Key Highlights
Who is impacted?
Companies based in UAE need to be geared up to adapt to these new changes. The companies need to evaluate the applicability of the provisions, align structure to make it tax-efficient in UAE, align policies for related party transactions, book-keeping, etc.
Applicability to foreign persons
Foreign entities and foreign individuals will be subject to CT only if they conduct a trade or business in the UAE in an ongoing or regular manner. Moreover, CT will generally not be levied on a foreign investor's income derived from dividends, capital gains, interest, royalties and other investment returns.
Way forward for companies?

Once the law is announced, businesses will require to consider the following aspects:

  • Assess the current position of the company and carry out an impact assessment.
  • Re-structure/re-organization existing corporate structure to make it tax-efficient.
  • Align tax and transfer pricing policies for an intra-group transaction to align with OECD guidelines.
  • Review existing Accounting, booking keeping system and gear up for audits which may be required for CT purposes
  • Obtaining registrations and compliances, as required by the law
We at Nexdigm are poised to assist businesses in UAE in aligning their policies, tax positions and structure as per the evolving tax landscape in the region. Our dynamic and experienced teams are well-suited to generate solutions that offer stability and help remain compliant.
Nexdigm 
Emirates Financial Towers | 503-C South Tower | DIFC | PO Box 507260 | Dubai | UAE
+971 4 2866677 | ThinkNext@nexdigm.com | www.nexdigm.com 
USA | Canada | Poland | UAE | India | Hong Kong | Japan
DISCLAIMER
This alert contains general information which is provided on an "as is" basis without warranties of any kind, express or implied and is not intended to address any particular situation. The information contained herein may not be comprehensive and should not be construed as specific advice or opinion. This alert should not be substituted for any professional advice or service, and it should not be acted or relied upon or used as a basis for any decision or action that may affect you or your business. It is also expressly clarified that this alert is not intended to be a form of solicitation or invitation or advertisement to create any adviser-client relationship.

Whilst every effort has been made to ensure the accuracy of the information contained in this alert, the same cannot be guaranteed. We accept no liability or responsibility to any person for any loss or damage incurred by relying on the information contained in this alert.

© 2022 Nexdigm Consulting Limited. All rights reserved.

Unsubscribe  |  View in browser