Effective June 1, 2023, Dubai and Free Zone companies will be subject to 9% corporate income tax in addition to 5% value-added tax (VAT). We support tax processing such as accounting and VAT representation with our partners who are certified by the Federal Tax Authority (Dubai’s National Tax Authority).
What is the taxation system in Dubai?
Taxation in the UAE is governed by the Federal Tax Authority (FTA) and all local and free zone companies are required to comply with its rules.
Specifically, you need to know the rules regarding VAT (Value added tax) and CT (Corporate Tax).
Regarding VAT
It is safe to assume that VAT is almost the same system as Japan’s consumption tax.
The tax rate is 5%, but as in Japan, corporations with revenues below a certain level (less than AED 375,000) are not required to file and pay taxes.
In order to file a VAT return, you must first notify the FTA, Dubai’s tax department, that your corporation is a VAT subject business. The following conditions must be met in order to file a VAT report.
∙ Sales exceeding AED 375,000 in the last 12 months
∙ If sales are expected to be AED 375,000 or more within the next 30 days
In addition, if any of the following apply to you, you may voluntarily notify us as a VAT business operator.
Sales or expenses* exceeding AED 187,500 in the past 12 months
If your sales or expenses* are expected to be AED 187,500 or more in the next 30 days
*Strictly supplies and imports
Corporate Tax
A 9% corporate income tax rate will be introduced for the fiscal year beginning June 1, 2023. As with VAT, the system is designed to reduce the burden on small and medium-sized enterprises (SMEs) as follows
The corporate income tax rate is 0% for the portion of profits for the past 12 months not exceeding AED 375,000.
A 9% corporate tax is levied on the amount exceeding AED 375,000.
Let me give you an example (if you had taxable income of AED 400,000 in one fiscal year)
(400,000-375,000) x 9% = AED 2,250 tax payment
Tax Advisory and Accounting Services
We work with a large local accounting firm to provide tax and accounting advisory services to our clients.
Accounting and Bookkeeping
Accounting & Taxation Consultancy’s qualified and experienced Dubai CPAs provide accounting and bookkeeping services and offer audit services tailored to your needs at competitive rates.
Reference price: from AED 950 per month ( less than 30 transactions per month, quarterly financial reporting, quarterly VAT returns, VAT advisory, FTA-compliant accounting books, FTA-compliant documentation support)
VAT-related services
We offer VAT registration, VAT return filing, VAT deregistration, VAT compliance, VAT health checks, and VAT tax agent services at competitive prices.
Reference price: AED 1,400 and up ( for each of the above services)
