Dubai fz tax
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how to determine when the fiscal year for CT begins, if in the Memorandum of association it is December 20?
All we know so far: Taxes in Dubai - All you need to know about it
Freezone companies are NOT excepted from corporate tax generally!!! Depends on many details and many of them are not regulated in detail by the authorities.
If we have a IFZA company, is there a mandatory legal requirement that needs immediate action?
Like, is there anything we should be aware of that we need to do right now? Register somewhere? Submit something?
Hey,
In short ”“ if your company was established before 1st June 2023, and your financial year corresponds to the calendar year, profits of 2023 will not be taxable.
Tax will be applied starting from the 2024 period and the first payment will be in 2025.
A company does not need to pay tax if it is engaged in qualified activities, but the list of such activities is very narrow. E-commerce, crypto, and marketing are not on the list. So generally your company will need to pay tax.
The first bracket AED 375 000 will not be taxable. Remaining profit ”“ 9%. If your annual income does not reach AED 3 000 000 you will be able to apply for small business relief and profit tax will not be applied for all profits.
Moreover, we expect that at least initially tax authorities should be quite flexible as regards the attribution of expenses to allowable deductions. If you are a tax resident in Dubai, you can also increase your salary (it is non-taxable for you, but an allowable deduction for the company). Future requirements for accounting and audit should be considered.
If you did not apply for VAT exemption, it might cause problems in the future (during the first audit it will be noticed).
So for sure you have some questions to consider and decide on your strategy and next steps.
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Does the small business relief apply for freezone companies?
So lets say my FZCO makes 1M AED per year in net profit. I pay still 0 in tax until end of 2026 whereas thereafter I pay 9% on 625'000?
Yes, but it's not AED 3mio net profit but revenue.
The official version:
In order to elect for Small Business Relief, an eligible Taxable Person's Revenue must be below or equal to AED 3,000,000 for the relevant Tax Period and all previous Tax Periods4. Where a Taxable Person's Revenue exceeds AED 3,000,000 in a Tax Period, the Taxable Person will no longer be able to elect for Small Business Relief, even if its Revenue is equal to or falls below the AED 3,000,000 threshold in subsequent Tax Periods.
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