For a long time, the UAE has been recognized for its tax-friendly atmosphere and its low taxation laws for foreigners, businesses, and investors. However, the nation has recently implemented some major tax reforms, and it has made major changes. Businesses and people are now navigating a more complicated tax structure due to the FTA’s implementation of corporation taxes, VAT, and excise taxes. Anyone doing business in the UAE must be aware of these changes to minimize their tax obligations and stay compliant.
This blog will cover a complete overview of UAE taxation for Saudi businesses, covering all the major aspects and key factors.
The UAE Taxation for Foreign Business
The UAE is a major participant in international trade and investment due to its advantageous location at the intersection of Europe, Asia, and Africa. Foreign direct investment (FDI) is still drawn to the country because of its infrastructure, business-friendly laws, and ease of doing business. There are currently over 140 double taxation treaties in effect in the nation, and cross-border transactions greatly profit from them. On the one hand, the UAE Corporate Tax framework offers a competitive tax rate when compared to the 23.5% global average tax rate; on the other hand, the tax legislation provides numerous advantages for companies operating in the nation, such as Free Zone benefits.
UAE Tax Rates for Saudi Businesses
There is no corporate tax on taxable revenue (profit) up to AED 375,000 (about USD 102,000), which is to help SMEs and startups.
9% corporate tax is applied on taxable income (profit) exceeding AED 375,000.
Multinational corporations with cross-group level income of 750 million (AED 3.15 billion) are subject to a 15% global minimum tax.
Corporate Tax Exemptions
The following are not subject to company tax in the UAE:
- Government and organisations under government authority
- Companies involved in the extraction and non-extraction of natural resources, provided they are already subject to emirate-level taxes.
- Pension funds, public benefit organizations, and charities.
Free Zone businesses may be eligible for 0% corporate tax on their qualifying income if they meet the requirements outlined in Ministerial Decision No. 265 of 2023 and Cabinet Decision No. 100 of 2023.
Requirements for Compliance
- Companies must register with the Federal Tax Authority for Corporate Tax purposes and receive a Tax Registration Number to comply with tax regulations.
- Create and preserve financial records and statements in accordance with International Financial Reporting Standards (IFRS).
- Within nine months of the conclusion of the fiscal year, submit the corporate tax returns and pertinent financial documents.
- After the end of the fiscal year, keep all accounting records and supporting documentation for at least seven years.
UAE Corporate Tax for Foreign Branches
A federal corporate tax on the earnings of Saudi businesses has been implemented in the United Arab Emirates. The purpose is to conform to international tax regulations and diversify government earnings.
The Corporate Tax Law and associated rulings from the Ministry of Finance serve as the foundation for the legal framework.
Taxable income, tax rates, and compliance requirements are all outlined in these regulations.
How to Register for UAE Taxation
Tax Compliance and Registration: Initially, Saudi businesses need to register on the Federal Tax Authority (FTA) website. Give the specifics of their business, branch data, and pertinent legal documents. Your trade license, parent business records, and evidence of branch establishment are all included in this.
Certified copies of the company’s financial statements, branch setup documentation, and incorporation documents must be submitted. Make sure that, if needed, all documents are translated into Arabic.
Filing tax returns and making timely tax payments are examples of compliance requirements.
This covers bank statements, invoices, and receipts. According to FTA regulations, you must keep these records for a certain amount of time.
There are consequences for noncompliance. There are penalties for late submission or payment. Wrong reporting may result in audits and additional fines. A foreign branch must register through the FTA portal, submit the required paperwork, and meet filing dates in order to register for corporation tax.
Last Verdicts
The UAE’s corporate tax system is a progressive change that ensures businesses make equitable contributions to the economy while bolstering the nation’s standing in international finance. Understanding the law, upholding strict tax compliance, and taking advantage of the UAE’s advantageous framework for business optimization present opportunities for multinational corporations. If you’re considering starting or expanding a business in the UAE, enrolling in a UAE taxation course in Saudi Arabia can provide the clarity and confidence you need. Learning under expert guidance especially from Sir Owais Mirchawala, widely regarded as one of the best UAE tax teachers in Saudi Arabia can make a real difference. His practical insights and real-world approach help simplify complex tax concepts and prepare professionals to navigate UAE taxation with confidence.
