UAE Ministry of Finance announced the implementation of corporate tax on Business Net Profits (No on Revenue/ sales) in January 2022. CT applies to all UAE Emirates. Corporate Tax (CT) is Direct tax levied on the Net income of corporations and other businesses. CT is also called “Corporate Income Tax” or “Business Profits Tax”. CT different Taxes from VAT, Excise Tax, and Customs Duty. UAE CT is effective for financial years starting on ‘or’ after 1 June 2023. (Article 69) Tax Period (article 57): The financial year of a taxable person shall be a Gregorian Calendar year ‘or’ a 12-month period.
UAE Corporate Tax Penalties
The penalties for various violations include:
- Penalty – AED. 500: Submit an incorrect Tax Returns
- Penalty – AED. 500 to 1,000: Failure to submit a Tax Return within the timeframe specified in Corporate Tax law
- Penalty – AED. 1.000 to 10,000: Failure to submit a Deregistration application within the time specified by the authority
- Penalty – AED. 1.000 to 5,000:Failure to inform amendment information to the Authority on time
- Penalty – AED. 10.000 to 20,000:Failure to Keep required Records and other information as specified in Corporate Tax Law
- Penalty – AED. 5,000:Failure to submit Records and documents in Arabic when authorities required
- Penalty – 14% Per Year: Failure to settle / Pay Corporate Tax Payable in the specified period.
- Penalty – AED. 20,000: Failure person subject to Tax Audit
It is crucial for businesses and individuals in the UAE to be aware of these penalties and their implications. Penalties act as a deterrent to non-compliance by encouraging taxpayers to fulfill their tax obligations and discouraging tax evasion. Staying informed and ensuring accurate record-keeping and timely tax-related actions are essential to prevent financial difficulties and maintain a positive relationship with the tax authorities.
Source: Cabinet Decision No. (75) of 2023 On the Administrative Penalties for Violations Related to the Application of Federal DecreeLaw No. (47) of 2022 on the Taxation of Corporations and Businesses