Corporate Income Tax. Rates And Regulation

As for the corporate income tax in the United Arab Emirates, there are no common rates or laws for this tax in the country as a whole, but instead, there are separates decrees and rates in each Emirate, governing the taxation. In practice, this kind of tax is applied to oil and gas corporations, and the government concession agreement determines the rates of the tax. The decrees in each Emirate impose the tax on income for all the legal entities, registered on the territory of this Emirate and their branches, doing business in the UAE. The legal entities are taxed

Corporate Income Tax in Dubai

As it was mentioned above, Dubai Emirate has its own income tax decree.

According to it, all the companies doing business in Dubai Emirate are required to pay income tax from 0 to up to 55 % of its total earning (maximum rate). The Dubai Income Tax Decree (and amendment of 1970) specifies the following corporate income tax rates for companies in Dubai:

Table – corporate income tax rates, depending on the amount of income

A company or each of its branches, carrying on a business of any type during an income tax year on the territory of Emirate is a “chargeable person”. In case of several branches of a Company involved in trading, each of them is regarded as separate chargeable persons and the Corporate body, including this branch, must not be a “chargeable person” itself.

According to this decree, “carrying on trade or business” means the following:

• Selling goods in the emirate;
• Manufacturing or management of the commercial enterprise in the Emirate;
• Selling a property, located in the Emirate;
• Provision of services in the Emirate.

A taxpayer in the Dubai Emirate is imposed with taxes on a sliding scale, except the case when this charged tax is reduced by the credit aggregate of oil accrued for that tax year, until the total amount of all the reductions given to all the accrued persons during this fiscal year exceeds the credit aggregate of oil for which this tax year is calculated.

The taxable income in Dubai is calculated after deducting all costs and expenses of the chargeable person, which received such income. These costs include expenses for the acquisition of goods, business operation costs, provisions for depreciation, obsolescence, and depletion of assets and losses incurred by the paying person connected to this business.