Dubai fz tax
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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.
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?
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 pay︀ tax if it is engaged in qualified activities, but the list of such activities is︁ very narrow. E-commerce, crypto, and marketing are not on the list. So generally your company︂ 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 000︄ you will be able to apply for small business relief and profit tax will not︅ be applied for all profits.
Moreover, we expect that at least initially tax authorities should︆ be quite flexible as regards the attribution of expenses to allowable deductions. If you are︇ a tax resident in Dubai, you can also increase your salary (it is non-taxable for︈ you, but an allowable deduction for the company). Future requirements for accounting and audit should︉ be considered.
If you did not apply for VAT exemption, it might cause problems in︊ the future (during the first audit it will be noticed).
So for sure you have︋ some questions to consider and decide on your strategy and next steps.
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 pay︀ tax if it is engaged in qualified activities, but the list of such activities is︁ very narrow. E-commerce, crypto, and marketing are not on the list. So generally your company︂ 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 000︄ you will be able to apply for small business relief and profit tax will not︅ be applied for all profits.
Moreover, we expect that at least initially tax authorities should︆ be quite flexible as regards the attribution of expenses to allowable deductions. If you are︇ a tax resident in Dubai, you can also increase your salary (it is non-taxable for︈ you, but an allowable deduction for the company). Future requirements for accounting and audit should︉ be considered.
If you did not apply for VAT exemption, it might cause problems in︊ the future (during the first audit it will be noticed).
So for sure you have︋ some questions to consider and decide on your strategy and next steps.
Does the small business relief︉ apply for freezone companies?
So lets say my FZCO makes 1M AED per year in︊ net profit. I pay still 0 in tax until end of 2026 whereas thereafter I︋ pay 9% on 625'000?
So lets say my FZCO makes 1M AED per year in︊ net profit. I pay still 0 in tax until end of 2026 whereas thereafter I︋ 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 equal︀ to or falls below the AED 3,000,000 threshold in subsequent Tax Periods.
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 equal︀ to or falls below the AED 3,000,000 threshold in subsequent Tax Periods.
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