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The UAE Ministry of Finance announced the lowest corporate tax rate within the GCC region at a standard rate of 9%. The announcement on 31 January 2022 is considered a huge step to attract foreign investments to UAE.
The UAE Ministry of Finance states that corporate tax rates will be levied only if the income exceeds the defined threshold limit. In all those cases where the net income is below the threshold, it will be exempted from corporate tax. Below is corporate tax applicability limit:
A multinational enterprise is a business that operates in its home country and in other countries, through a foreign subsidiary, branch, or another form of presence/registration. Simply making income outside its home country without a foreign presence or registration would not make a business a multinational corporation.
According to the UAE Ministry of Finance announcement, the Federal Tax Authority (FTA) will be responsible for the administration, collection, and enforcement of the corporate tax from:
The UAE Corporate Tax income regime proposes using the accounting net profit (or loss) position in financial statements as the starting point for determining taxable income. As result, the financial reports generated by the companies in UAE will form the ground for such assessment.
Among the different financial statements, the profit and loss account statement will be key because it's a statement that is prepared to determine the net profit earned by the business for a given period. Corporate tax is levied on the net income, and the net profit/loss from the profit and loss account will become the base for tax calculation.
The corporate tax calculation process will include finding the net adjusted income after considering the allowed deductions and then evaluating the taxable business income
Smart business management will play a key role in maintaining all financial reports, records, and statements.
Whatever your business model or industry, we are here to help you meet all tax requirements without hassle while having powerful features to support your business growth.
TallyPrime is a business management software that has integrated features and functions to manage your business more efficiently than before. TallyPrime features can help you to be corporate tax ready and VAT compliant, it also comes with more smart features like:
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