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Corporate tax in UAE

tax clarifications
Corporate Tax

Understanding Private Clarifications from the Federal Tax Authority (FTA) in the UAE

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In the United Arab Emirates (UAE), the Federal Tax Authority (FTA) is the official body responsible for administering, collecting, and enforcing federal taxes. These include: To help businesses and individuals comply with tax regulations, the FTA regularly publishes public guidelines, tax clarifications, and technical interpretations. When tax issues are not addressed in official guidance, the FTA offers a private clarification mechanism. This is particularly useful for businesses seeking clarity on matters such as VAT registration in the UAE, VAT accounting in Dubai, or corporate tax services in the UAE. 1. Purpose of This Guide This document provides a clear overview of how to request a private tax clarification through the EmaraTax platform, helping taxpayers understand: The clarification process, required documents, potential fees, and refund policies For more information, refer to the official FTA service card: đź‘‰ tax.gov.ae – Tax Clarifications 2. Nature of Private Clarifications Private clarifications are formal documents issued by the FTA, signed and stamped by an authorized official. These are often sought by businesses receiving VAT consultancy in Dubai or those involved in complex The request has to do with federal taxes or associated fines. taxpayer making the request, or taxpayers under special circumstances, i.e. the A third party is not covered by the FTA’s clarification. However, clarifications are considered null and void if: The facts differ from the actual transaction or implementation 3. Eligibility to Apply Two levels of eligibility are considered when submitting a clarification: Applications may be rejected by the FTA if: A member of a tax group files a clarification instead of the parent or representative company 4. Clarification Request Process All requests for clarification must be submitted through the EmaraTax portal. A valid user profile is required. The FTA evaluates the request and may either accept, reject, or request additional information. The applicant must respond within 40 business days of any such request. This process is especially relevant to companies seeking VAT de-registration services in Dubai, tax restructuring advice, or clarification on VAT accounting treatments. 5. Issuing of Clarifications Clarifications are issued in English or Arabic, based on the language used in the application. If the request involves multiple tax types (e.g., VAT and corporate tax), separate clarifications are provided. The FTA typically responds within 50 business days of receiving a complete request, or from the date of additional information submission 6. Common Mistakes That Lead to Rejection The FTA has identified several recurring issues in clarification requests: Filing clarifications on topics already covered in FTA guidance or prior clarifications Requests should be well-prepared and supported by documentation when VAT consultancy is used in the UAE or corporate tax consultants are engaged in Dubai. Conclusion Using the FTA private clarification service through EmaraTax can help businesses reduce tax risk and ensure full compliance. This tool is vital for entities engaged in: By understanding the process and avoiding common mistakes, you can make informed, confident tax decisions backed by official clarification from the FTA. 👉 Need Professional Help? If you’re unsure how to prepare your clarification or want expert assistance with VAT consultancy in Dubai or corporate tax services in the UAE, working with a registered tax advisor can ensure your application meets all FTA requirements.

corporate tax for natural persons
Corporate Tax

When Do Natural Persons Need to Register for Corporate Tax in the UAE?

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The launch of the UAE’s Corporate Tax (CT) regime in June 2023 has raised important questions for individuals about their tax obligations. While it is clear that corporate entities are subject to the tax, natural persons—such as freelancers, sole proprietors, and investors—may also be required to register, depending on their income and activities. This article explains the specific conditions under which a natural person must register for Corporate Tax in the UAE, with a focus on key income thresholds, exemptions, and compliance obligations. Who Is Considered a Taxable Natural Person? According to the UAE Corporate Tax Law, a natural person (i.e., an individual) may be subject to Corporate Tax if they: Exempt Income for Natural Persons Includes: When Does a Natural Person Need to Register? A natural person is required to register for Corporate Tax in the UAE only if their total annual business turnover exceeds AED 1 million within a calendar year. This threshold applies exclusively to income earned from business or commercial activities, not from exempt sources such as salaries or personal investments. For example, freelancers and sole proprietors who generate over AED 1 million annually through services like consulting, content creation, or design must register for Corporate Tax. Similarly, licensed business owners—such as individuals operating a retail shop, café, or online business—are also required to register if their turnover surpasses the threshold. In cases where an individual has mixed sources of income, such as a combination of a salaried job and freelance work, only the income from the business activity is considered when determining whether registration is necessary. If the business portion alone exceeds AED 1 million in a year, the individual must register, even though their salary remains exempt from Corporate Tax. When Is Registration Not Required? Registration for Corporate Tax is not required for natural persons in several common situations. Salaried employees are fully exempt, as employment income does not fall within the scope of Corporate Tax. Likewise, individuals who earn income from passive real estate investments—such as renting or selling property without holding a business license—are not required to register. Additionally, small-scale traders or freelancers whose total annual business income remains below the AED 1 million threshold are exempt from registration requirements. Special Consideration: Real Estate Income Real estate income is generally exempt from Corporate Tax for natural persons when it arises from passive activities, such as renting out property for personal investment purposes. This means that individuals who own and lease out residential or commercial properties without engaging in a licensed real estate business are not required to register for Corporate Tax, even if their rental income exceeds AED 1 million annually. However, the exemption does not apply if the individual holds a business license related to real estate—such as a broker, developer, or property manager—or if the income stems from a commercial real estate activity. In such cases, the person is considered to be conducting a business, which brings the income within the scope of Corporate Tax. For example, renting out a personal villa would typically remain tax-exempt, unless it forms part of a licensed real estate business. How to Register for Corporate Tax If you meet the criteria, registration should be completed through the Federal Tax Authority (FTA)’s EmaraTax portal. Steps include: Important: Registration must be completed before the end of the relevant tax period to avoid penalties. Do You Need to Register? Natural persons are not required to register for Corporate Tax if their income comes solely from wages, passive investments, or exempt real estate activities. However, registration becomes mandatory if an individual earns business income exceeding AED 1 million per year, excluding any exempt income categories. If there is any uncertainty about your tax status or whether registration is necessary, it is strongly recommended to consult a qualified tax advisor to ensure compliance with UAE tax laws. Need Help Navigating Corporate Tax? Whether you’re a freelancer, investor, or property owner in the UAE, Maats Auditors & Consultants can help you understand your obligations and ensure full compliance with the Corporate Tax law. Contact us today for expert guidance on registration, filing, and staying tax-efficient in the UAE.

Company setup in Dubai
Business & Strategy

Things to know about Company formation in UAE

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The UAE is such a welcoming world for any business, playing a prominent role in global trade and commerce. Many foreign investors look forward to starting company setup in Dubai as the government is supportive, total freedom for company formation, 100% trade ownership, full revenue repatriation and business-friendly taxation. Thus, the country has become a popular choice of investment globally. Registering a foreign company in the UAE Foreign businesses in the UAE normally set up a branch or a Representative office. The branch is allowed to carry out commercial activities within the UAE but Representative offices can only market their products but cannot get a profit within the UAE. Both forms of companies have to obtain a commercial registration and license, linked to the parent companies. Freezone business in UAE The seven Emirates in Dubai have free zones with special taxes, customs, and import regimes. Company setup in Dubai Free zones is the best choice to start up a business as the company can enjoy 100% foreign ownership, complete profit repatriation, 100% exemption from any income tax, visa quotas, 24/7 access and more.  There are almost 40 free zones in UAE. Also, the company registration in the free zone Is relatively simple once the documents got ready. Characteristics for free zone company formation Choose the right free zone that allows the business to expand on a wider scale. Chose the one that supports your business requirements and activities Different free zones have different rules and regulations and also the number and types of documents required, vary according to free zone and type of business activity Differences in share capital requirement in various free zones Free trading between free zones and any import/export activity without any tax or duty Mainland business in UAE Limited Liability Company setup in Dubai is the most prevalent form and the standard type of business in the UAE mainland. These Onshore companies are a popular choice for traders, professional services, and retail businesses. Onshore companies are licensed by the Department of Economic Development (DED) and governed by the UAE Commercial Companies Law (CCL). Onshore companies can take part in business activities without the restrictions of the location. Choose the business activity and an ideal location Determine the business legal structure Get a local sponsor or local service agent Get a mainland trade license Apply for relevant visas Secure an office space Sole Proprietorship When you want to operate as the sole owner of the company, then go for the sole proprietorship in which the owner will have to assume all financial responsibilities of the company. In a sole proprietorship, the business entity is owned by one individual with the trade license issued in his/her name. Unlike a UAE Mainland company which requires at least 51% of shares registered to a UAE/GCC national sponsor, a sole proprietorship is granted 100% ownership of the business entity. To successfully register for a sole proprietorship, necessary documents are to be furnished. Offshore business in UAE Offshore businesses are quick and easy to set up which makes them yet another prevalent choice of company formation in UAE. Offshore companies are international businesses offering no tax or low tax benefits.  These companies are set up with the purpose to work outside its jurisdiction. The benefits of setting up an offshore company include an opportunity to expand to the international market, a business-friendly environment, tax neutrality on your earnings, etc. One may face no or fewer complications for offshore company registration. The procedures take a few weeks to complete with the submission of required documents. No corporate tax to pay with 100% foreign ownership Hassle-free incorporation processes Lawsuit protection Protected assets Privacy Choice to issue many classes of shares Just one shareholder and one director required Start your company with MAATS Any type of business you opt for, MAATS, the best accounting services in Dubai to setup company setup in Dubai, let our experience and knowledge guide you through the procedures involved in company formation. We reduce any workload from your side so that you can sit back and relax, just furnishing the required documents and getting involved only where you have to. Get in contact with us to start your business in UAE the easiest way.

Corporate tax in UAE
Corporate Tax

Impact of UAE Corporate tax on Mainland Vs Freezone businesses

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The UAE is known to be an extremely favourable place for investors worldwide due to the supporting policies and business environment. The UAE is a leading international financial, commercial space and tourism spot in the Middle East region. The nation has introduced a federal corporate income tax (CIT) which is to be in effect from June 1st, 2023. The introduction of corporate income tax could directly influence Mainland as well as Freezone businesses. The Corporate tax in UAE The UAE corporate tax is a direct form of tax levied on the profit of business entities. UAE Corporate Tax will apply to all businesses in the UAE, except for the extraction of natural resources, which will remain subject to Emirate-level corporate taxation. Foreign entities, individuals and businesses will be subject to Corporate Tax only if they conduct a trade or business in the UAE in an ongoing or regular manner. Mainland vs. Freezone businesses in the UAE There are the 3 jurisdictions- Mainland, Freezone and Offshore with evident differences with respect to several criteria. Mainland, Freezone and Offshore businesses have differences in terms of ownership, the scope of business, office space, visa eligibility, company audit and others. Mainland companies and corporate tax in UAE A mainland company is nothing but an onshore company that is registered under the administrative authority of the concerned Emirate. A UAE mainland company is mainly characterized by free trading opportunities. The company’s trade license is issued by the Department of Economic Development of the particular Emirate. A registered mainland company in the UAE is authorized to trade in the UAE local market as well as outside the UAE. Corporate Tax will be charged on the annual taxable income of a Mainland business as follows: For small businesses with taxable profits not exceeding AED 375,000 (approximately USD 102,100) the CIT rate is set at 0% in order to facilitate the development of start-ups, for taxable income exceeding AED 375,000; and a different tax rate (not yet specified) for large multinationals that meet specific criteria sets. Freezone companies and corporate tax in UAE In the UAE, there are many Free Zones. A free zone company is formed within a special jurisdiction that comes under the specific Emirate. Free zone jurisdictions have their own guidelines and have a government regulatory body, the Free Zone Authority. A free zone company is characterized by the benefits of 100% foreign ownership and tax concessions. It can only trade within the free zone and outside the UAE. In the context of Corporate Tax Planning Freezones will be subjected to the new Corporate Income Tax. The tax incentives offered by the Free Zones will be considered by the regime for the businesses there that meet the tax requirements and do not engage in business domestically with the UAE mainland business enterprises or individuals. The now free zones interest the foreign investors with a zero corporate tax regime. At present, the companies functioning in the free zones are subjected to this zero per cent corporate tax and also zero per cent personal income tax. Free zone companies are permitted to trade within the zone limits and they can also trade internationally as re-exports. These companies will profit from the corporate tax incentives. Free zone companies are permitted to carry trade in the mainland area as per the agreement with the local distributors. It helps free zone businesses widen their mainland market and build a large customer base for their products and services. Some free zone areas also offer a dual license that allows the companies to extend their activities to the mainland. These free zone companies can carry on business on the mainland from their offices in the free zone. There are also chances that these companies may affect by the new CT law. Choose the best corporate tax consultancy in the UAE Investors and entrepreneurs are very much confused about the new corporate tax. As they are eager to know how the UAE corporate tax will affect their businesses, the mainland, as well as the free zone companies, are advised to wait for more clarity from the Ministry of Finance—but consulting an established tax consultancy with the necessary experience in the field as MAATS can help you with adequate information regarding corporate tax advisory. MAATS is a reliable accounting, auditing and VAT and Corporate tax consultancy service provider, that guides the clients with relevant and updated information to keep in compliance with government rules.

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