Direct Taxes

The direct tax policy of the UAE is relatively simple and clear, especially in terms of personal income tax. In terms of corporate income tax, different tax policies are implemented according to factors such as the company's profit level, residency status, and specific industries. These policies provide strong support for the UAE's economic growth and accurate financial planning.

Table of Contents

Personal income tax Corporate Income Tax Corporate tax services Double taxation consulting Foreign Tax Credit (FTC)

Direct taxes in the UAE mainly include personal income tax and corporate income tax. The following is a detailed introduction to these two types of taxes:

Personal income tax

In the UAE, the personal income tax rate is 0%. This means that UAE residents and non-residents do not have to pay personal income tax on salary income, dividends or interest income. This policy has greatly enhanced the ability to accumulate personal wealth and is one of the important factors that make the UAE a good place to live and do business.

Corporate Income Tax

The corporate income tax policy in the UAE is relatively complex. Here are some key points:

1. Tax rate and threshold:

The UAE imposes a 9% federal corporate income tax on companies with annual profits exceeding 375,000 dirhams (about 690,000 yuan). Companies with annual profits below 375,000 dirhams are exempt.

2. Taxation of global income:

For UAE tax resident companies, their taxable income will include income from the UAE and non-UAE. This means that once they become UAE tax resident companies, their global income will be taxed. However, for non-resident companies, they are generally taxed only on their income from the UAE.

3. Specific corporate tax policy:

Large multinational companies with global total revenues exceeding 750 million euros (about 3 billion dirhams) are subject to a separate tax policy and are subject to a 15% domestic minimum supplementary tax (DMTT). This policy aims to establish a fair and transparent tax system that meets global standards.

Foreign banks operating in the UAE are required to pay taxes in accordance with the corporate tax law and an additional 20% new annual tax (this policy is mainly for foreign banks operating in Dubai, and foreign banks in the Dubai Financial Center are not included).

Free zone companies can continue to enjoy tax exemption benefits if they meet the regulations. However, it should be noted that Federal Decree No. 47 sets tax exemption conditions, such as companies must have sufficient economic substance in the UAE and generate qualified income.

4. Tax exemptions and incentives:

Qualified capital gains and dividends, intra-group transactions and reorganizations are subject to federal corporate tax exemptions. In addition, the UAE government may also introduce research and development (R&D) tax incentives to encourage R&D activities and promote innovation and economic growth in the UAE.

Corporate tax services

1. Policy interpretation: Provide interpretation and consultation of UAE tax policies for enterprises, including policy provisions and latest changes of major taxes such as corporate income tax, value-added tax, withholding tax, etc.

2. Compliance advice: Provide tax compliance advice based on the specific situation of the enterprise to ensure that the enterprise complies with the UAE tax laws and regulations and avoid tax risks.

3. Planning guidance: Provide tax planning guidance for enterprises based on their business model and financial status, help them reasonably arrange their tax structure and optimize their tax burden.

Double taxation consulting

1. Understand the content of the agreement: Before cross-border transactions, taxpayers are advised to understand in detail the content of the double taxation agreement between the UAE and its counterparty countries in order to plan the tax structure reasonably.

2. Consult professional tax agencies: Since double taxation agreements involve complex legal terms and regulations, taxpayers are advised to consult professional tax agencies or lawyers when conducting cross-border transactions to ensure compliance and maximize tax benefits.

3. Keep relevant documents: Taxpayers should properly keep documents and documents related to cross-border transactions, such as contracts, invoices, payment records, etc., so as to prove their tax compliance to the tax authorities when necessary.

Foreign Tax Credit (FTC)

1. Definition and purpose of FTC

FTC means that a government allows its residents or citizens to deduct taxes they have paid in foreign countries when paying domestic taxes. The purpose of this system is to avoid international double taxation, reduce the tax burden of multinational taxpayers, and thus promote international trade and investment.

2. Scope and conditions of FTC

Scope of application: FTC usually applies to income obtained by resident taxpayers or citizen taxpayers from foreign countries, which has already paid taxes in foreign countries.

Applicable conditions:

The taxpayer must be a resident or citizen of the country and have obtained taxable income from foreign countries.

The taxpayer has paid taxes in foreign countries, and these taxes are legal and recognized.

Taxpayers need to declare and pay taxes in accordance with the provisions of their own tax laws.

3. FTC declaration and credit procedures

Declaration requirements: When taxpayers declare taxes to their own tax authorities, they need to submit documents proving that they have paid taxes in foreign countries. These documents usually include tax payment certificates and tax returns issued by foreign tax authorities.

Credit procedure: After receiving the taxpayer's declaration and supporting documents, the tax authorities will review them. If the review is passed, the tax authorities will allow the taxpayer to credit the taxes he has paid in the foreign country.