Your answers to the most common queries. Guiding you through UAE VAT, Corporate Tax, and IFRS with clarity and confidence. If you don’t find what you’re looking for, feel free to contact us directly.
Categories
Corporate Tax
Value Added Tax (VAT)
International Financial Reporting Standards (IFRS)
Frequently Asked Questions
Corporate Tax
It is the UAE's legislation that imposes a federal tax on corporations and business profits, effective for tax periods starting on or after 1 June 2023. UAE Ministry of Finance
All juridical persons (e.g., companies) conducting business activities in the UAE are subject to Corporate Tax, unless exempted under the law. UAE Ministry of Finance
The standard rate is 9% on taxable income exceeding the threshold specified by the Cabinet. A 0% rate applies to qualifying income of Free Zone Persons. UAE Ministry of Finance
Taxable income includes all income derived from business activities, minus allowable deductions as per the law. UAE Ministry of Finance
Yes, exemptions apply to government entities, government-controlled entities, and certain businesses engaged in extractive or non-extractive natural resource activities. UAE Ministry of Finance
A Free Zone Person is an entity established in a designated Free Zone that meets specific criteria set by the Cabinet. UAE Ministry of Finance
The tax period generally aligns with the entity's financial year, unless a different period is approved by the Federal Tax Authority. UAE Ministry of Finance
The return is due within nine months from the end of the tax period. For entities with a calendar year, the first return is due by 30 September 2025. Sovereign Group
Penalties are imposed as per the Tax Procedures Law, which includes fines for late payment and non-compliance. UAE Ministry of Finance
Yes, tax losses can be carried forward to offset future taxable income, subject to certain conditions. UAE Ministry of Finance
Yes, entities can form tax groups if they meet specific criteria, including ownership thresholds and residency requirements. Sovereign Group
The DMTT is a 15% tax imposed on large multinational enterprises to ensure a minimum level of taxation, effective from 1 January 2025. Reuters
The government is considering introducing tax incentives, including research and development credits and employment-related incentives, subject to legislative approval. Reuters
Entities are required to comply with transfer pricing regulations, ensuring that transactions between related parties are conducted at arm's length. Federal Tax Authority UAE
Yes, withholding tax is applicable on certain payments to non-residents, as specified in the law. UAE Ministry of Finance
The FTA is responsible for administering and enforcing the Corporate Tax Law, including registration, compliance, and dispute resolution. UAE Ministry of Finance
Yes, a company can be deregistered if it ceases to meet the criteria for being a taxable person. UAE Ministry of Finance
Non-compliance can result in penalties, interest on unpaid taxes, and potential legal action. UAE Ministry of Finance
Yes, small businesses with revenues below a specified threshold may be eligible for simplified compliance requirements. Sovereign Group
For detailed information, refer to the official publications from the Ministry of Finance and the Federal Tax Authority.
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Value Added Tax (VAT)
As per Article 3 of the Federal Decree-Law No. (8) of 2017, the standard rate of VAT in the UAE is 5%.
Article 45 of the Decree-Law provides a list of exemptions, including certain financial services, residential properties, and healthcare services.
According to Article 27, the place of supply for Goods is determined based on the location where the Goods are delivered or made available to the recipient.
Article 28 specifies that the place of supply for Services is generally the place where the supplier is established, unless otherwise specified in the Decree-Law.
Article 31 outlines that the value of supply is the consideration agreed upon between the supplier and the recipient, excluding VAT.
Article 33 addresses the treatment of vouchers, specifying that the supply of a voucher is treated as a supply of Goods or Services when the voucher is redeemed.
Article 34 states that the import value of Goods is determined based on the customs value, including any customs duties and other charges.
Article 36 provides that transactions between related parties should be valued at the open market value to ensure that VAT is applied correctly.
Article 37 specifies that the value of deemed supply is determined based on the fair market value of the Goods or Services supplied.
Article 38 outlines that certain free zones are designated as "Designated Zones," and supplies within these zones may be treated as outside the scope of VAT, subject to specific conditions.
Article 40 states that the tax due on a supply is calculated by applying the applicable VAT rate to the value of the supply.
Article 67 outlines the requirements for issuing tax invoices, including the information that must be included and the time frame for issuance.
Article 69 specifies that tax returns must be filed electronically with the Federal Tax Authority within the time frame set by the Authority.
Article 81 provides a schedule of penalties for various violations, including failure to register, failure to file returns, and failure to pay tax.
Article 72 outlines the conditions under which input tax may be adjusted, including when Goods or Services are used for non-business purposes.
Article 73 specifies that VAT paid on bad debts may be reclaimed under certain conditions, including when the debt is written off.
Article 74 outlines the procedures for VAT refunds, including the conditions under which refunds may be granted and the time frame for processing.
Article 80 provides that related entities may apply to form a tax group, allowing them to be treated as a single taxable person for VAT purposes.
Article 81 specifies that government entities are subject to VAT in the same manner as other taxable persons, unless specifically exempted.
Article 82 outlines the transitional provisions, including the application of VAT to contracts entered into before the implementation date and the treatment of supplies made during the transition period.
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International Financial Reporting Standards (IFRS)
Entities must apply the simplified approach and measure lifetime ECLs always, without tracking significant increases in credit risk.
If modification is substantial, the old liability is derecognized, and a new one recognized. If not substantial, adjust carrying amount with a gain/loss in P&L.
SPPI (Solely Payments of Principal and Interest) test determines whether contractual cash flows represent basic lending arrangements, a key step for amortized cost/FVOCI classification.
At present value of lease payments over the lease term, discounted using the interest rate implicit in the lease or lessee’s incremental borrowing rate.
For leases with a term of 12 months or less, or leases of low-value assets (like laptops, phones, etc.).
If it increases scope with commensurate consideration, it’s a new lease. Otherwise, remeasure lease liability with adjustment to ROU asset.
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