Corporate Tax Services in Abu Dhabi

The ever-changing world of corporate tax in Abu Dhabi and the rest of the UAE makes it tricky and full of time consumption when following corporate tax legislation. Corporate tax, or taxation of the company's profits, is a very important constituent of the economic structure in the UAE. In Abu Dhabi, for example, businesses should cover federal and local tax requirements to ensure their observance of all legal duties. More importantly, however, following these regulations is also primarily not to avoid some sort of penalty but to maintain business reputation and operational integrity.

Corporate tax services advise companies on how to operate efficiently within the constraints of such legislation. Professional practices will allow a company to ensure the accuracy of tax reporting, optimize tax strategies, and timely adjust to the latest changes in the law. This allows businesses to manage their tax liabilities more effectively, avoid costly mistakes, and ultimately focus on their core business operations, thereby contributing to overall business success.

Corporate Tax Rate

Below is the Abu Dhabi, United Arab Emirates corporate tax rate, assessed based on the following structure:

• 9% on taxable income above AED 375,000.
• 0% on taxable income up to AED 375,000.

Also, a different tax rate is applied to big multinational corporations if certain criteria are met.

Corporate Tax Laws and Regulations in Abu Dhabi

The UAE introduced a federal corporate tax law effective for all businesses in Abu Dhabi, effective June 2023. The default rate is 9% on the taxable income earned that exceeds AED 375,000 while applying a 0% tax rate on those that are up to AED 375,000. Large multinationals that meet certain criteria will have a different tax rate applied. The businesses in Abu Dhabi are to be registered under FTA and allocated a TRN. Businesses are supposed to maintain adequate books of accounts and ancillary records, file an annual corporate tax return within 9 months from the end of the financial year, and pay the tax-related liability within the designated time to avoid penalty and interest charges. A quarterly advance payment is payable for those with an annual taxable income of over AED 10 million.

Other requirements include compliance with the transfer pricing, preparation of the transfer pricing documentation, and filing of the transfer pricing annual report. Penalties for non-compliance come as late registration fees pegged at AED 20,000-50,000; late filing of tax return fees pegged at AED 1,000-25,000; and late payment of tax penalty, pegged at 1-4% of the unpaid tax amount, per month. Businesses should refer to the FTA website or a tax professional for the most current information because requirements and deadlines are subject to change.

Our Corporate Tax Services in Abu Dhabi

Below are Reyson Badger’s corporate tax services in Abu Dhabi.

Corporate Tax Registration

We can assist your business in getting registered with FTA and obtaining the Tax Registration Number. Our team members make the process of registration smooth and easy by advising on what documents and information are required. This service keeps your business compliant with the UAE's tax laws and regulations and avoids potential penalties.

Corporate Tax Return Filing

Our experts at our company will prepare and file your corporate tax return annually to the highest standard, in good time, review the financial statement, calculate the tax liability, and submit the return electronically. Minimum chances of error or delay and meeting FTA requirements of compliance are guaranteed through this service.

Corporate Tax Audit

Audits: We offer support on audits, ensuring that your books are in order and that you may be able to minimize penalties. Our professionals will review the audit notification for sufficiency, prepare and obtain the required documentation, and represent your company during the audit. We resolve issues promptly and amicably.

Corporate Tax Assessment

Our team will assess and address the tax assessment or notices from FTA. We ensure that you understand the assessment and work towards eliminating disputes or issues. Our objective is to minimize additional taxes, penalties, or interest.

Corporate Tax for Free Zones

We offer special tax services to the companies operating within the free zones, with due consideration to special regulations and benefits. Our experts fully understand the special needs and opportunities created by free zones and work to ensure that your business receives maximum benefits while remaining in compliance.

Corporate Tax Accounting

Our accounting experts will make sure the records are accurate and meet the required standards of the UAE tax laws and regulations. We offer bookkeeping, financial statement preparation, and tax accounting services that ensure your business has valid books for preparing your tax filings and ensuring the requirements of audits.

Registration Process for Corporate Tax in Abu Dhabi

Eligibility Criteria for Registration

• Business Type: All businesses operating in Abu Dhabi, including free zone companies, are required to register for corporate tax.
• Taxable Income: Businesses with a taxable income exceeding AED 375,000 are required to register for corporate tax.
• Registration Timeline: Businesses must register for corporate tax within 30 days of meeting the eligibility criteria.

Steps to Register for Corporate Tax

1. Create an Account: Create an account on the Federal Tax Authority (FTA) portal.

2. Submit Registration Application: Submit the registration application, providing required documents and information.

3. Pay Registration Fees: Pay the registration fees, if applicable.

4. Obtain Tax Registration Number (TRN): Obtain a Tax Registration Number (TRN) upon successful registration.

5. Submit Tax Returns: Submit tax returns and pay corporate tax on a regular basis, as required by the FTA.

6. Maintain Records: Maintain accurate and complete records of business transactions and tax-related documents.

Entities exempted from Corporate Tax 

• Government entities and authorities
• Non-profit organizations and charities
• Public benefit organizations
• Investment funds, provided such funds fulfill certain criteria
• Pension and Social Security funds
• Natural resources extracting entities, provided the same activities come under taxation at an Emirate level
• Entities in free zones, provided the transactions meet certain conditions and arrangements
• Foreign governments and its/their respective entities
• International organizations and its/their respective entities

Entities engaged in certain activities, such as:

•  Education and academic institutions
•  Healthcare services
•  Social services
•  Renewable energy projects
•  Certain financial institutions (subject to conditions)

Other than that Abu Dhabi has introduced exemptions for:

• Entities operating in the Abu Dhabi Global Market (ADGM) free zone
• Entities engaged in certain industrial activities, such as manufacturing and production
• Entities operating in the Abu Dhabi Airport Free Zone

Exemptions may be subject to specific conditions, requirements, or regulations, and may be reviewed or updated by the Abu Dhabi government. 

Taxable Income in Abu Dhabi

• Business income from trading activities, services, and professions
• Income from the rental of commercial and industrial properties
• Income from royalties, interests, and dividends
• Capital gains from the sale of assets (subject to conditions)
• Income from foreign branches and subsidiaries (subject to conditions)

Exclusions from Taxable Income:

• Income from employment (subject to personal income tax)
• Income from dividends and capital gains for individual investors (subject to conditions)
• Income from certain financial instruments, such as bonds and sukuk
• Income from certain government and quasi-government entities
• Income from foreign sources (subject to conditions)

Allowable Deductions:

• Business expenses and costs
• Depreciation and amortization
• Interest expenses
• Charitable donations
• Research and development expenses

Corporate Tax Implications for Free Zones

• Taxation Policies: Free zone entities are subject to corporate tax, but may be eligible for exemptions or special tax rates.
• Tax Residency: Free zone entities are considered tax residents in the UAE and are subject to corporate tax on their worldwide income.
• Tax Rates: The standard corporate tax rate in the UAE is 9%, but free zone entities may be eligible for a reduced tax rate or exemption.

Taxation Policies for Free Zone Entities

• Free Zone Incentives: Free zones offer various incentives, including tax exemptions, reduced tax rates, and simplified regulatory procedures.
• Tax Holidays: Some free zones offer tax holidays for a specified period, allowing businesses to operate tax-free.
• Special Economic Zones (SEZs): SEZs are designated areas that offer special tax and regulatory incentives to businesses operating within them.

Benefits and Challenges for Free Zone Businesses

Benefits: Free zone businesses can benefit from tax exemptions, reduced tax rates, and simplified regulatory procedures.

Challenges: Free zone businesses must comply with complex tax regulations and may face restrictions on their business activities.

Corporate Tax Key Compliance Dates and Deadlines

• Registration Deadline: Businesses must register for corporate tax within 30 days of meeting the eligibility criteria.
• Tax Return Filing Deadline: Tax returns must be filed within 9 months from the end of the financial year.
• Tax Payment Deadline: Tax payments must be made within the specified deadline to avoid penalties and fines.

Documentation Needed for Compliance

• Tax Registration Certificate: A tax registration certificate is required to register for corporate tax.
• Financial Statements: Financial statements, including the balance sheet and income statement, are required to be filed with the tax return.
• Tax Return Form: A tax return form must be completed and filed with the Federal Tax Authority (FTA).
• Supporting Documents: Supporting documents, such as invoices and receipts, may be required to support the tax return.

Benefits of Using Our Corporate Tax Services

Through our corporate tax services in Abu Dhabi, your company will have the following advantages:

• UAE Tax Regulations Expert Knowledge: Our team's expertise in local tax legislation means your business will be fully in compliance with the UAE's corporate tax framework.
• Customized Tax Strategy: We will develop a tax planning strategy based on the needs of your business to offer ideal tax efficiency and reduced liabilities.
• Filing and Reporting Accurately: We make sure your company's tax return is prepared well and timely filed to avoid any fines, penalties, and audits.
• Proactive Tax Advisory: Our professionals continuously advise in order to keep your organization updated on the various changes the tax laws and regulations go through for your business to be compliant and tax-efficient.
• Save Time and Cost: By outsourcing corporate tax management to us, you can devote more time to the core business while we handle the complexities in tax compliance and reporting.
• Risk Management: Our accounting experts will identify the potential tax risks relevant to your company and develop the best strategies to minimize the risks, thus helping the company avoid expensive mistakes or regulatory action against it.
• Long-term Tax Planning: We render the service of long-term tax planning necessary to allow your business to sustain financial growth in the long term.

Why Choose Us for Corporate Tax Services in Abu Dhabi?

We provide Abu Dhabi corporate tax services at Reyson Badger, backed by a group of qualified and certified professional tax experts. We command the breadth of knowledge encompassed by local and international practices related to taxation. This entails keeping your business perfectly compliant with rapidly changing tax legislation. We have helped several clients minimize tax liabilities and avoid potential risks with our already successful track record in managing corporate tax matters. What does make the difference is attention: it takes time for us to delve into the peculiarities of your business and find the right approach to your tax problems. Whether you need help with complex current tax issues or long-term planning, Reyson Badger's professionals and outstanding service will make sure your business receives the best possible help.

FAQs

1. Is there corporation tax in Abu Dhabi?

Yes, Abu Dhabi, like the rest of the UAE, has introduced a federal Corporate Tax applicable to businesses. Effective from June 1, 2023, the corporate tax rate is 9% on taxable income exceeding AED 375,000. However, qualifying free zone entities may benefit from preferential tax treatment if they meet specific conditions.

2. What is the service tax in Abu Dhabi?

The UAE does not levy a service tax as traditionally defined in some other countries. Instead, businesses offering goods and services in Abu Dhabi are required to comply with Value Added Tax (VAT), which is charged at a standard rate of 5% on taxable supplies, except for exempt or zero-rated items.

3. Who will pay corporate tax in the UAE?

Corporate tax applies to:

• UAE-based businesses: Subject to a 9% tax on taxable profits exceeding AED 375,000.
• Foreign entities: If their income is derived from the UAE or connected to a UAE permanent establishment.
• Individuals conducting business: Individuals with business licenses or registered activities under UAE laws.
  Qualifying free zone entities may remain exempt if they comply with the UAE corporate tax rules for free zones.

4. How to file corporate tax in UAE?

To file corporate tax in the UAE:

• Obtain a Tax Registration Number (TRN) from the Federal Tax Authority (FTA).
• Maintain proper accounting records and prepare audited financial statements.
• Submit a Corporate Tax Return via the FTA portal within 9 months of the end of your financial year.
• Ensure accurate calculation of taxable income and timely payment of due taxes to avoid penalties.

Businesses are advised to consult a professional tax advisor for compliance and filing assistance.