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UAE TAX 2024

February 23, 202459 min read

The most significant recent development is the implementation of a 9% federal corporate income tax (CIT) effective June 1, 2023. This marks a significant shift in the UAE’s taxation landscape, previously reliant on indirect taxes like VAT. The UAE has been actively implementing international tax transparency standards and participating in global initiatives like the Base Erosion and Profit Shifting (BEPS) project. This focus is expected to continue, enhancing international cooperation and exchange of information.

The Federal Tax Authority (FTA) is continuously prioritizing digitalization to streamline tax processes and improve taxpayer compliance. This includes online registration, filing, and payment for various taxes.

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    Overview of the different types of taxes and their rates in the UAE

    UAE Tax Rates and Details

    Tax TypeDescriptionRateNotes
    Corporate Income Tax (CIT)Tax on net profits of businesses9%Applies to most businesses except for specific sectors like oil & gas and free zones.
    Value Added Tax (VAT)Tax on the supply of goods and services5%Standard rate, with zero-rated and exempt categories.
    Excise TaxTax on specific goods deemed harmfulVaries depending on productApplies to tobacco, carbonated beverages, energy drinks, electronic smoking devices, and sweetened drinks/products.
    Customs DutiesTax on imported goodsVaries depending on productTypically a range of 0-10%, with some exempt categories.
    Social Security ContributionsPaid by employers and employees27% (combined)Employer contributes 12.5%, employee contributes 5%, capped at AED 5,000/month.
    End-of-Service GratuityPayment to employees upon terminationBased on salary and years of serviceNot considered income tax, but a separate benefit.

    UAE Income Tax

    This guide provides a comprehensive overview of the United Arab Emirates’ (UAE) unique UAE Tax System , emphasizing key features affecting both individuals and businesses. Here’s a summary of the main points covered:

    Corporate Tax UAE 2024

    The introduction of Federal Corporate Tax (CT) in June 2023 marked a significant shift in the UAE’s fiscal landscape. Let’s delve deeper into its specifics:

    The 9% Rate: This standard rate applies to taxable profits exceeding AED 375,000. This means businesses with profits below this threshold are exempt, offering relief to smaller entities.

    Exempt Entities: Several entities are exempt from CT, including:

    • UAE government entities and their controlled companies
    • Extractive and non-extractive natural resource businesses under specific agreements
    • Qualifying public benefit entities and investment funds

    Industries with Different Rates:

    • Oil & Gas: These sectors operate under separate fiscal regimes with varying tax rates determined by concession agreements or fiscal letters.
    • Large Multinationals: The UAE is currently implementing a global minimum tax (Pillar Two) for large groups with consolidated revenue exceeding €750 million. The specific tax rate is yet to be announced.

    Emirate-level Decrees: It’s important to note that pre-existing Emirate-level corporate tax decrees remain in place, though currently not applicable. These decrees implemented varied tax structures, with rates ranging up to 55%. However, with the introduction of Federal CT, they are currently superseded.

    Corporate Income Tax UAE

    The UAE implemented a federal Corporate Income Tax (CIT) in June 2023, marking a significant change in its fiscal landscape. Here’s a breakdown of its key features:

    Tax Rate:

    • Standard Rate: 9% on taxable profits exceeding AED 375,000.
    • Small Business Relief: Businesses with profits below AED 375,000 are exempt.
    • Oil & Gas: Subject to separate fiscal regimes with varying tax rates based on agreements.
    • Large Multinationals: To be implemented under Pillar Two (global minimum tax) with rates yet to be announced.

    Exemptions:

    • UAE government entities and their controlled companies.
    • Extractive and non-extractive natural resource businesses under specific agreements.
    • Qualifying public benefit entities and investment funds.

    Application:

    • Applies to both onshore and free zone entities (except Qualifying Free Zone Persons).
    • Transfer pricing rules and other international tax standards are in effect.

    Key Points:

    • The system aims to be competitive with a low standard rate and exemptions for specific entities.
    • Certain industries have distinct regulations, especially within oil & gas.
    • Consulting with a qualified tax advisor is crucial for navigating the system and ensuring compliance.

    Additional Resources:

    Corporate Tax Law UAE

    The Corporate Tax Law UAE, officially “Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses,” lays the foundation for the federal corporate income tax (CIT) implemented in June 2023. Here’s a breakdown of its key features:

    Key Provisions:

    • Taxable entities: Applies to most businesses operating in the UAE, including onshore and free zone entities (except for specific exemptions).
    • Tax Rates:
      • Standard rate: 9% on taxable profits exceeding AED 375,000.
      • Small Business Relief: Exemption for businesses with profits below AED 375,000.
      • Oil & Gas: Subject to separate fiscal regimes with varying tax rates.
      • Large Multinationals: To be implemented under Pillar Two (global minimum tax) with rates yet to be announced.
    • Exemptions:
      • UAE government entities and their controlled companies.
      • Extractive and non-extractive natural resource businesses under specific agreements.
      • Qualifying public benefit entities and investment funds.
    • Taxable Income: Defined as net profit determined according to specific accounting standards and adjusted for tax purposes.
    • Deductible Expenses: Generally accepted business expenses as per accounting standards with specific limitations and restrictions.
    • Transfer Pricing: Applies to transactions between related parties, ensuring arm’s length pricing principles are followed.
    • Anti-Avoidance: Includes measures to prevent tax abuse and manipulation.
    • Filing and Payment: Electronic filing of tax returns quarterly or annually, with tax payable within specified deadlines.
    • Penalties: Applicable for non-compliance with filing and payment obligations.

    Exploring Tax Regulations and New Developments:

    Tax Residency UAE

    • Physical presence:
      • A natural person is considered a UAE tax resident if they are physically present in the UAE for 183 days or more in a consecutive 12-month period.
      • If they are physically present for 90 days or more in a consecutive 12-month period and meet one other condition:
        • They are a UAE national.
        • They hold a valid residence permit in the UAE.
        • They hold the nationality of any GCC member state and have a permanent place of residence in the UAE.
    • Center of vital interests:
      • Even if the physical presence criteria are not met, an individual might still be considered a UAE tax resident if their center of vital interests is in the UAE. This requires assessment based on factors like:
        • Family ties and habitual residence.
        • Economic interests and business activities.
        • Social and cultural connections.

    Companies and other legal entities:

    • A legal person is considered a UAE tax resident if:
      • It is incorporated or otherwise formed or recognized in the UAE.
      • It is otherwise considered a tax resident of the UAE under specific legislation.

    Implications:

    • Tax residents are generally subject to tax on their worldwide income earned in the UAE and abroad (depending on double taxation treaties).
    • Non-residents are only subject to tax on their UAE-sourced income.
    • Obtaining a Tax Residency Certificate can be beneficial for claiming treaty benefits and reducing tax burdens in certain situations.

    Additional Resources:

    UAE New Tax

    When you say “UAE New Tax,” it’s not entirely clear which specific tax you’re referring to. The UAE has implemented several new taxes in recent years,

    1. Federal Corporate Tax (CT): Introduced in June 2023, this is a 9% tax on profits exceeding AED 375,000 for most businesses operating in the UAE. It’s the most significant new tax in terms of scope and impact.

    2. Excise Tax: Introduced in 2017, this tax targets specific goods, like tobacco and sugary drinks, adding an additional layer of taxation. While not “new” in 2024, it’s still an important aspect of the UAE tax system.

    3. VAT (Value Added Tax): Introduced in 2018, this 5% tax applies to most goods and services purchased in the UAE. While not “new” in 2024, it’s relevant to understand the overall tax landscape.

    4. Emirate-level Corporate Tax Decrees: These existed before the federal CT but are currently not applied. They are worth mentioning for historical context and potential future developments.

    Tax Calculator UAE

    The type of tax calculator you need depends on what you’re trying to calculate. Here are some options based on your needs:

    1. VAT Calculator:

    • Use this if you want to calculate the VAT amount on a specific purchase in the UAE.

    2.FTA VAT Calculator

    Corporate Tax Calculator:

    • Use this if you’re a business owner trying to estimate your potential corporate tax liability.
    • These calculators typically require more information about your business, such as income, expenses, and deductions.
    • Examples EY UAE Corporate Tax Calculator

    3.Excise Tax Calculator:


    UAE Tax Calculators: Finding the Right Tool for You

    The type of tax calculator you need depends on what you’re trying to calculate. Here are some options based on your needs:

    1. VAT Calculator:

    2. Corporate Tax Calculator:

    3. Excise Tax Calculator:

    4. Import Duty Calculator:

    • Use this to estimate the import duties and taxes you might pay when bringing goods into the UAE.
    • These calculators usually require information like the type of goods, value, and origin.
    • Examples:

    NOTE: These calculators are for general estimation purposes only and should not be considered as a substitute for professional tax advice.

    Tax Certificate UAE

    There are different types of tax certificates available in the UAE, each serving a specific purpose. Here’s a breakdown of the most common ones:

    1. Tax Residency Certificate (TRC):

    • Issued by the Federal Tax Authority (FTA) to individuals and companies meeting the tax residency criteria in the UAE.
    • Allows individuals to claim treaty benefits and reduces tax burdens by proving residency in the UAE for tax purposes.
    • Companies operating in the UAE and needing to prove their residency for specific situations can also apply.

    2. Commercial Activities Certificate:

    • Issued by the FTA to businesses registered for VAT.
    • Used to claim VAT refunds on specific business-related expenses incurred outside the UAE.
    • May be required by foreign countries to demonstrate eligibility for VAT refunds.

    3. Customs Duty Exemption Certificate:

    • Issued by the Ministry of Finance to entities eligible for exemptions from customs duties on imported goods.
    • Can significantly reduce import costs for specific categories of goods and entities.

    4. Free Zone Tax Status Certificate:

    • Issued by the relevant Free Zone Authority to companies operating within a free zone.
    • Confirms the company’s tax exemptions or benefits applicable within the specific free zone.

    5. Zakat Exemption Certificate:

    • Issued by the relevant Zakat authority to entities exempt from paying Zakat (alms tax).
    • Applicable to religious and charitable organizations, educational institutions, and other qualifying entities.

    Miscellaneous Tax Topics and Queries:

    UAE Withholding Tax

    1. Oil & Gas Sector:

    • Payments made within the oil & gas sector might be subject to withholding tax under specific fiscal regimes established by individual concession agreements or fiscal letters. These rates and rules vary depending on the specific agreement.

    2. Pillar Two (Global Minimum Tax):

    • The UAE is currently implementing Pillar Two of the OECD’s Base Erosion and Profit Shifting (BEPS) project, which aims to establish a global minimum corporate tax rate. Under Pillar Two, large multinationals with consolidated revenue exceeding €750 million will be subject to a minimum effective tax rate of at least 15%. The specific details and implementation timeline for withholding tax under Pillar Two in the UAE are yet to be announced.

    3. Future Developments:

    • Although currently absent, the UAE government has reserved the right to introduce a general withholding tax system in the future through a Cabinet decision. The specific timing and details of such a system are unknown.

    Therefore, it’s important to note that while there is currently no general withholding tax in the UAE, specific situations like the oil & gas sector and future developments under Pillar Two might require withholding on certain payments.

    Tax Domicile Certificate UAE

    Tax Domicile Certificate UAE Issued by the Federal Tax Authority (FTA), the TRC confirms your status as a tax resident in the UAE. This can be beneficial for several reasons:

    • Claiming Treaty Benefits: If you’re a resident of a country with a Double Taxation Agreement (DTA) with the UAE, you may be able to claim reduced tax rates or exemptions on certain types of income earned in the UAE. The TRC acts as proof of your residency for claiming these benefits.
    • Reduced Tax Burden: Depending on your residency status and the source of your income, you may be subject to different tax rates in the UAE. The TRC helps clarify your tax obligations and potentially reduce your overall tax burden.
    • Compliance Purposes: Certain financial institutions or government agencies may require the TRC for specific transactions or approvals related to your tax residency.

    Who is eligible for a TRC?

    • Individuals: You can be eligible if you meet one of the following criteria:
      • Physical Presence: Resided in the UAE for at least 183 days in a consecutive 12-month period.
      • Center of Vital Interests: Even if you don’t meet the physical presence requirement, you might still be considered a resident based on your personal and economic ties to the UAE.
    • Companies and legal entities: You can be eligible if you are:
      • Incorporated or formed in the UAE.
      • Considered a tax resident of the UAE under specific legislation.

    How to obtain a TRC:

    • Individuals and companies can apply for the TRC online through the Federal Tax Authority’s e-services portal.
    • The application requires submitting relevant documents and paying a processing fee.
    • You can also choose to apply through a registered tax agent for assistance.

    Tax Registration Number UAE

    Tax Registration Number (TRN) in the UAE is a unique 15-digit identifier assigned by the Federal Tax Authority (FTA) to individuals and businesses registered for any of the following taxes:

    • VAT (Value Added Tax): Most businesses with annual taxable supplies exceeding AED 375,000 must register for VAT and obtain a TRN.
    • Corporate Tax (CT): Businesses earning profits above AED 375,000 are subject to CT and require a TRN.
    • Excise Tax: If a business imports or manufactures excisable goods like tobacco or sugary drinks, they need a TRN.

    Benefits of having a TRN:

    • Issue tax invoices: Businesses with a TRN can issue valid tax invoices with their TRN printed on them, allowing them to charge VAT to customers and claim input tax credits.
    • File tax returns: Registered businesses need to file VAT, CT, or Excise Tax returns electronically using their TRN.
    • Comply with tax regulations: Having a TRN demonstrates compliance with UAE tax regulations.

    Types of TRNs:

    • Standard TRN: Assigned to most businesses upon registration for any of the above taxes.
    • Group TRN: Used by companies with multiple legal entities operating under one group structure.
    • Non-Resident TRN: Issued to non-resident businesses conducting taxable activities in the UAE.

    How to obtain a TRN:

    • Online: Register through the FTA’s e-services portal if you meet the eligibility criteria for VAT, CT, or Excise Tax.
    • Through a tax agent: Qualified tax agents can assist with the registration process.

    Tax Return in UAE

    Navigating Tax Returns in the UAE: A Guide for Individuals and Businesses

    Tax returns are an essential aspect of complying with the UAE’s tax system. Here’s a breakdown of the key points you need to know:

    Who needs to file a tax return in the UAE?

    Individuals:

    • Currently, individuals do not file personal income tax returns in the UAE. This means you don’t need to report your income unless you fall under specific categories like:
      • Earning income from activities requiring a trade license (e.g., freelance work).
      • Having rental income exceeding a specific threshold.

    Businesses:

    • Businesses registered for any of the following taxes must file returns:
      • VAT (Value Added Tax): Quarterly or annually, depending on turnover.
      • Corporate Tax (CT): Annually, for businesses with profits exceeding AED 375,000.
      • Excise Tax: Quarterly or monthly, depending on activity.

    What information is required in a tax return?

    The specific information required varies depending on the tax type and your business activities. However, some general details might include:

    • Company information: Name, TRN, etc.
    • Taxable income: Calculated based on specific accounting standards and adjustments.
    • Expenses: Specific allowable deductions depending on the tax type.
    • VAT details: Input tax claimed and output tax collected.
    • Excise tax details: Amounts paid and due.

    How to file a tax return in the UAE:

    • Electronically: All VAT, CT, and Excise Tax returns must be filed electronically through the FTA’s e-services portal.
    • Through a tax agent: Qualified tax agents can assist with the preparation and filing of your returns.

    Important deadlines and penalties:

    • Missing tax return deadlines can result in penalties and late payment charges.
    • It’s crucial to stay updated on relevant deadlines and ensure timely filing.

    Additional resources:

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    UAE Visa Fee

    UAE Tax Return

    1. VAT Refund for Tourists: This refers to the program that allows tourists to claim a refund of the Value Added Tax (VAT) they paid on their purchases in the UAE. Here’s what you need to know:

    • Eligibility: You must be a non-resident of the UAE and have spent a minimum of AED 180 per store and per tax invoice.
    • Process: Look for the Planet Tax Free logo in participating stores, request a Tax Free form, get it validated at an exit point, and then choose your refund method (cash, mail, or online).
    • Resource

    2. Exempted Goods and Services: There are certain goods and services in the UAE that are exempt from VAT. These include:

    • Basic necessities like food, water, electricity, and healthcare.
    • Educational services.
    • Financial services.
    • Public transport.
    • Exports of goods and services.
    • Specific industries like oil & gas.
    TAX UAE UPDATE 2024
    TAX UAE UPDATE 2024

    Specialized Tax Areas:

    Alcohol Tax UAE

    The “alcohol tax” in the UAE is actually a combination of three different taxes:

    1. Excise Tax: This is a 100% tax levied on all alcoholic beverages, regardless of type or strength. It is the most significant contributor to the overall cost of alcohol in the UAE.

    2. Municipality Tax: Previously, a 30% municipality tax was applied on top of the excise tax in most Emirates, further increasing the cost. However, as of January 1, 2023, the municipality tax on alcohol was suspended in Dubai, leading to a significant price drop for alcoholic beverages in that emirate.

    3. VAT (Value Added Tax): The standard 5% VAT is also applied to the final price of alcoholic beverages, including the excise tax and municipality tax (where applicable).

    Current Situation:

    • In Dubai, only the 100% excise tax and the 5% VAT apply, making alcohol significantly cheaper than before.
    • In other Emirates, the 100% excise tax, 5% VAT, and the 30% municipality tax remain in effect, keeping the prices higher than in Dubai.

    Additional Points:

    • Non-Muslims: Only non-Muslims with a valid alcohol license can purchase alcohol in the UAE.
    • Availability: Alcohol is primarily sold in licensed liquor stores and restaurants in designated areas.
    • Strict Laws: Public consumption and intoxication are illegal and can lead to hefty fines or even imprisonment.

    Excise Tax UAE

    Excise tax is an indirect tax levied on specific goods considered harmful to human health or the environment. In the UAE, it applies to:

    • Tobacco products: Cigarettes, cigars, shisha, etc. (100% tax rate)
    • Energy drinks: All types of energy drinks (100% tax rate)
    • Electronic smoking devices: Vapes and related products (100% tax rate)
    • Liquids used in electronic smoking devices: Vape juices and refills (100% tax rate)
    • Carbonated drinks: Sugary sodas and other aerated beverages (50% tax rate)
    • Any product with added sugar or sweeteners: Applies to a range of products depending on specific criteria (50% tax rate)

    Impact on Consumers:

    Excise tax increases the final price of these goods, aiming to discourage consumption and generate revenue for the government.

    Excise Tax Registration and Payment:

    • Businesses importing, producing, or stockpiling excisable goods in the UAE must register for excise tax with the Federal Tax Authority (FTA).
    • Specific filing and payment deadlines apply depending on the business activities.

    Resources:

    • Federal Tax Authority – Excise Tax:
    • Cabinet Decision No. 52 of 2019 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise Price

    UAE Import Tax

    Types of Import Tax:

    • Customs Duty: This is the main import tax, levied on most imported goods as a percentage of their Customs Insured Freight (CIF) value. The standard rate is 5%, but it can be higher (up to 100%) for certain goods like alcohol and tobacco.
    • Selective Tax: This applies to specific goods like carbonated drinks and energy drinks (50% rate).

    Factors Affecting Import Tax:

    • HS Code: Goods are classified under specific Harmonized System (HS) codes, which determine the applicable duty rate.
    • Free Trade Agreements (FTAs): If the UAE has an FTA with the exporting country, a reduced or zero import duty may apply.
    • Origin of Goods: The country where the goods were produced or substantially transformed can impact the duty rate.

    Additional Fees:

    • Import Clearance Fee: A nominal fee charged for processing customs declarations.
    • Other Charges: Storage fees, inspection charges, etc., may apply depending on the goods and circumstances.

    VAT Tax in UAE


    You’ve mentioned VAT tax in the UAE. Here’s some information to help you out:

    What is VAT Tax in the UAE?

    Value Added Tax (VAT) is an indirect tax levied on the consumption of most goods and services in the UAE. It was introduced in January 2018 at a standard rate of 5%.

    Who is affected by VAT in the UAE?

    • Businesses: Any business with taxable supplies exceeding AED 375,000 must register for VAT and charge it on their sales. This includes:
      • Selling goods and services within the UAE
      • Importing goods into the UAE
      • Providing electronic services
    • Consumers: Ultimately, consumers bear the cost of VAT as businesses include it in the final price of goods and services.

    What are the exemptions from VAT in the UAE?

    • Basic necessities: Food, water, electricity, healthcare, and education.
    • Financial services: Banking, insurance, and investment services.
    • Exports of goods and services: Goods and services supplied outside the UAE are exempt from VAT.
    • Specific industries: Oil and gas, public transport, and domestic residential real estate.

    What are the key points to remember about VAT in the UAE?

    • Tax invoices: Registered businesses must issue tax invoices with the VAT amount clearly indicated.
    • Tax returns: VAT-registered businesses must file electronic returns periodically (quarterly or annually).
    • Input tax credit: Businesses can claim back VAT paid on their purchases under certain conditions.
    • Penalties: Failing to register or comply with VAT regulations can result in penalties.

    Additional Resources:

    VAT Tax Refund UAE

    There are actually two situations where you might ask about “VAT Tax Refund UAE”:

    1. VAT Refund for Tourists UAE Tax-Free Shopping:

    • This program allows tourists and visitors to claim a refund of the Value Added Tax (VAT) they paid on purchases made during their stay in the UAE.
    • Eligibility: You must be a non-resident with a tourist visa, spend at least AED 250 per store and per tax invoice, and export the purchased goods within 90 days from the date of purchase.
    • Process: Look for the Planet Tax Free logo in participating stores, request a Tax Free form, get it validated at an exit point (airport, land border, or seaport), and choose your refund method (cash, mail, or online).
    • Resource: 

    2. Input Tax Credit for Businesses:

    • This applies to UAE-registered businesses that are subject to VAT. They can claim back the VAT they paid on their purchases as a deduction against the VAT they collect on their sales.
    • Conditions: The purchases must be for taxable business activities, and proper tax invoices must be obtained.
    • Process: Claim the input tax credit in your VAT return filed electronically through the FTA portal.
    • Resource:

    There are no lottery taxes in the UAE. Currently, lotteries are not permitted in any form within the UAE. This includes traditional ticket-based lotteries, online lotteries, and any other forms of gambling.

    Proforma Tax Invoice UAE

    Proforma Tax Invoice

    Your Company Name

    Your Company Address
    City, Postal Code
    Contact Information

    Date: [Date]

    To:
    Customer Name
    Customer Address
    City, Postal Code

    Proforma Tax Invoice No: [Invoice Number]

    Item DescriptionQuantityUnit Price (AED)Total (AED)
    Product/Service 1

    Subtotal: [Subtotal]
    VAT (5%): [VAT Amount]
    Total Amount (AED): [Total Amount]

    Payment Terms: [Specify payment terms, e.g., 30 days from the invoice date]

    Bank Details:
    Your Bank Name
    Account Name
    Account Number
    IBAN

    Notes:
    – All prices are in UAE Dirhams (AED).
    – VAT Registration No: [Your VAT Registration Number]

    Thank you for choosing Your Company Name. Please make the payment by the due date to avoid any inconvenience.

    Your Company Logo

    A proforma tax invoice in the UAE acts as a preliminary bill used before goods are delivered or services are rendered. It outlines the details of the proposed transaction and serves several key purposes:

    • Clarifies expectations: Both the supplier and customer understand the pricing, taxes, and other terms of the transaction before it occurs.
    • Secures agreements: Proforma invoices might be required to secure approvals, permits, or pre-payments.
    • Facilitates customs clearance: For imports, proforma invoices help with customs valuation and duty calculations.

    Key Elements of a Proforma Tax Invoice in the UAE:

    • Seller and buyer information: Names, addresses, and Tax Registration Numbers (TRNs) are essential.
    • Invoice number and date: For identification and tracking purposes.
    • Product/service description: Clear and detailed description of what’s being provided.
    • Quantity and unit price: Clearly state the number of items and their individual price.
    • Discounts and additional charges: Any applicable discounts or extra fees must be shown separately.
    • Total amount (before tax): The combined value of all items without VAT.
    • VAT amount: Calculated at the standard rate of 5% (unless exempt).
    • Total amount (including tax): The final amount payable by the customer.
    • Payment terms: Clearly outline the due date and accepted payment methods.
    • Validity period: Indicate how long the proforma invoice remains valid.

    Important things to remember:

    • A proforma invoice is not a tax invoice and cannot be used for claiming input tax credit.
    • It typically doesn’t contain payment details like bank account information.
    • Issuing a proforma invoice doesn’t create a legal obligation until a formal contract is signed.

    Tax Credit Note UAE

    A Tax Credit Note (TCN) is a crucial document in the UAE’s Value Added Tax (VAT) system. It helps businesses adjust the taxable amount of a previously issued tax invoice in specific situations. Here’s a breakdown of its key aspects:

    When is a TCN issued?

    A TCN is issued when a reduction in the output tax occurs on a previously issued tax invoice. This can happen due to various reasons, such as:

    • Returned goods: If a customer returns goods, the supplier must issue a TCN to reflect the reduced taxable amount.
    • Price reduction: If the agreed price of goods or services is reduced after the initial invoice, a TCN is needed.
    • Cancellation of supply: If a supply is completely cancelled, a TCN with a value of 100% of the original invoice amount is issued.
    • Errors or mistakes: If the original invoice contains errors in calculations or tax amounts, a TCN can be issued to correct them.

    Benefits of using a TCN:

    • Reduces tax liability: By issuing a TCN, businesses can claim a reduction in the VAT amount they owe to the authorities.
    • Ensures compliance: TCNs ensure accurate reporting and compliance with VAT regulations.
    • Improves record-keeping: They provide a clear audit trail for changes made to invoices.

    Key points to remember about TCNs in the UAE:

    • Time limits: You must issue a TCN within 14 days of the event triggering the tax reduction.
    • Content: The TCN must clearly state the reason for the adjustment, reference the original invoice number, and show the revised taxable amount and VAT amount.
    • Electronic issuance: TCNs must be issued electronically through the Federal Tax Authority (FTA) portal.
    • Penalties: Failing to issue a TCN when required can lead to penalties.

    Additional resources:

    Tax Report UAE

    1. VAT Report (Value Added Tax):

    • Who files: Businesses with taxable supplies exceeding AED 375,000 per year.
    • Types: Quarterly (for businesses with annual taxable supplies exceeding AED 18 million) or annually (for others).
    • Filing deadlines:
      • Quarterly: 15th of the month following the end of the quarter.
      • Annual: 28th of December following the end of the tax year.

    2. Corporate Tax Report:

    • Who files: Businesses earning profits exceeding AED 375,000 per year.
    • Type: Annual
    • Filing deadline: 9 months from the end of the tax year (June 30th for most businesses).

    Excise Tax Report:

    • Who files: Businesses importing, producing, or stockpiling excisable goods (e.g., tobacco, sugary drinks).
    • Types: Monthly or quarterly depending on activity.
    • Filing deadlines:
      • Monthly: 15th of the month following the reporting period.
      • Quarterly: 15th of the month following the end of the quarter.

    UAE India Tax Treaty

    The Agreement for Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital between the UAE and India is a crucial agreement for businesses and individuals operating in both countries. Here’s a summary of its key aspects:

    Main Purpose:

    • Eliminate double taxation on income earned by residents of one country in the other country.
    • Promote cross-border trade and investment between the UAE and India.

    Key Provisions:

    • Resident: Defines who qualifies as a resident of each country for tax purposes.
    • Permanent Establishment (PE): Specifies what constitutes a PE, potentially triggering taxation in the other country.
    • Business Profits: Sets limitations on how much tax each country can levy on business profits earned by residents of the other country.
    • Dividends, Interest, and Royalties: Specifies tax rates for these types of income earned by residents of one country from sources in the other.
    • Capital Gains: Outlines how capital gains are taxed in each country.
    • Information Exchange: Allows for exchange of tax information between the two countries.

    Benefits:

    • Reduced tax burden for individuals and businesses operating in both countries.
    • Increased certainty and transparency for cross-border transactions.
    • Enhanced trade and investment opportunities.

    UAE UK Double Tax Treaty

    The Double Taxation Convention between the UAE and the UK is an agreement designed to prevent individuals and businesses from being taxed twice on the same income. Here’s a breakdown of its key aspects:

    Main Purpose:

    • Eliminate double taxation on income and capital gains earned by residents of one country in the other country.
    • Encourage cross-border trade and investment between the UAE and the UK.

    Key Provisions:

    • Resident: Defines who qualifies as a resident of each country for tax purposes.
    • Permanent Establishment (PE): Specifies what constitutes a PE, potentially triggering taxation in the other country.
    • Business Profits: Sets limitations on how much tax each country can levy on business profits earned by residents of the other country.
    • Dividends, Interest, and Royalties: Specifies tax rates for these types of income earned by residents of one country from sources in the other.
    • Capital Gains: Outlines how capital gains are taxed in each country.
    • Information Exchange: Allows for exchange of tax information between the two countries.

    Benefits:

    • Reduced tax burden for individuals and businesses operating in both countries.
    • Increased certainty and transparency for cross-border transactions.
    • Enhanced trade and investment opportunities.

    US UAE Tax Treaty

    There is no current double taxation treaty between the United States and the United Arab Emirates (UAE). This means that individuals and businesses operating in both countries could be subject to double taxation on their income.

    However, there are some alternative options and resources to help minimize the impact:

    For Individuals:

    • Foreign Earned Income Exclusion (FEIE): US citizens living and working in the UAE might qualify for the FEIE, which allows them to exclude a certain amount of foreign earned income from US taxation.
    • Foreign Tax Credit (FTC): US taxpayers who pay taxes to the UAE may be able to claim a credit against their US tax liability for the foreign taxes paid.
    • Consult with a tax advisor: A qualified tax advisor specializing in both US and UAE tax laws can help you navigate the complexities of the situation and advise on the best strategies for minimizing your tax burden.

    For Businesses:

    • Structuring your business: Consider structuring your business in a way that minimizes its taxable presence in both the US and the UAE. This could involve setting up a branch or subsidiary in one country or the other, depending on your specific circumstances.
    • Transfer pricing: If your business has operations in both countries, it’s crucial to ensure that its transfer pricing practices comply with both US and UAE regulations.
    • Consult with a tax advisor: As with individuals, a qualified tax advisor can help businesses navigate the challenges of operating in both countries and minimize their tax liabilities.

    Federal Tax Authority UAE VAT Registration

    The Federal Tax Authority (FTA) in the UAE handles VAT registration for businesses operating within the country. Here’s a breakdown of the process:

    Eligibility:

    • You must be a business operating in the UAE.
    • Your taxable supplies and imports exceed AED 375,000 per year.
    • You can voluntarily register if your taxable supplies and imports (or taxable expenses) exceed AED 187,500 per year.

    Registration Process:

    1. Create an e-Services account: Visit the FTA website and register for an e-Services account.
    2. Activate your account: Follow the instructions to activate your account and receive a Taxpayer Identification Number (TIN).
    3. Create a Taxable Person Profile: Complete the online form with your business information, including legal form, activity, and contact details.
    4. Register for VAT: Choose the “Register for VAT” option and complete the application form. You’ll need details like your estimated annual taxable supplies, imports, and expenses.
    5. Submit supporting documents: Upload required documents like trade licenses, financial statements, and proof of address.
    6. Pay the registration fee: The fee is AED 200, and you can pay online through e-Services.
    7. Receive your Tax Registration Certificate (TRC): Once your application is approved, you’ll receive your TRC electronically.

    Additional Information:

    • The registration process can usually be completed within 5 working days.
    • You can register online or through a tax agent.
    • The FTA offers various resources and guides for VAT registration on their website.
    • You can check your VAT registration status online through your e-Services account.

    Federal Tax Authority UAE VAT Return

    Filing VAT Returns with the Federal Tax Authority (FTA) in the UAE

    The Federal Tax Authority (FTA) in the UAE requires businesses registered for VAT to file periodic returns and pay any associated VAT liability. Here’s a breakdown of the key aspects:

    Who Needs to File VAT Returns?

    • Businesses registered for VAT in the UAE
    • Businesses with taxable supplies and imports exceeding AED 375,000 per year
    • Businesses voluntarily registered, even if their taxable supplies and imports are below the threshold

    Types of VAT Returns:

    • Quarterly: Businesses with annual taxable supplies exceeding AED 18 million must file quarterly returns.
    • Annual: Businesses with annual taxable supplies below AED 18 million can file annually.

    Filing Deadlines:

    • Quarterly: 15th of the month following the end of the quarter.
    • Annual: 28th of December following the end of the tax year.

    How to File VAT Returns:

    Required Information for VAT Returns:

    • Taxable supplies and imports
    • Input tax deductions
    • Net VAT due
    • Other relevant details like exemptions and adjustments

    Penalties for Late or Incorrect Filings:

    • Penalties apply for late or inaccurate filing, ranging from AED 1,000 to AED 20,000.

    Recoverable Input Tax in UAE

    Recoverable input tax in the UAE refers to the portion of Value Added Tax (VAT) paid on purchases that a registered business can claim back from the Federal Tax Authority (FTA). This helps to ensure that VAT is ultimately paid only on the value added at each stage of the supply chain.

    Eligibility for Claiming Recoverable Input Tax:

    • You must be a VAT-registered business in the UAE.
    • The purchased goods or services must be used for making taxable supplies (not exempt supplies).
    • You must have a proper tax invoice (with the VAT amount clearly shown) from the supplier.

    Types of Recoverable Input Tax:

    • Standard-rated input tax: The recoverable portion is usually 5% of the purchase price.
    • Zero-rated input tax: The full amount of VAT paid can be recovered.

    Conditions for Recovery:

    • The goods or services must be used for making taxable supplies within the UAE.
    • You must have kept proper records of your purchases and invoices.
    • You must claim the input tax within the prescribed timeframe (usually 4 years).

    Methods for Claiming Recoverable Input Tax:

    • Direct deduction: You can directly deduct the recoverable input tax from your output tax (VAT collected on your sales) when filing your VAT return.
    • Refund: If your recoverable input tax exceeds your output tax, you can claim a refund from the FTA.

    Simplified Tax Invoice UAE

    A Simplified Tax Invoice is a simplified version of a Tax Invoice used in the UAE for specific situations. Here’s what you need to know:

    When to Use:

    • For taxable supplies of goods or services to non-VAT registered recipients.
    • For taxable supplies of goods or services with a total consideration (including VAT) not exceeding AED 10,000.

    Required Information:

    • Clearly state “Tax Invoice” prominently.
    • Supplier’s name, address, and Tax Registration Number (TRN).
    • Date of issue.
    • Description of goods or services.
    • Total consideration.
    • VAT amount (calculated at the standard rate of 5%).

    Not Required Information:

    • Individual item prices or quantities.
    • Taxable base amount (excluding VAT).
    • Exemption details (if applicable).

    Benefits:

    • Simpler and faster to issue compared to full Tax Invoices.
    • Reduces administrative burden for both suppliers and recipients.

    Tax Credit Note Format UAE

    Tax Credit Note

    Tax Credit Note

    Your Company Name
    Your Company Address
    Tax Registration Number (TRN)

    Date of Issuance: [Date]

    Reference to Original Invoice

    Original Tax Invoice Number: [Original Invoice Number]
    Date of the Original Invoice: [Date of Original Invoice]

    Reason for Issuing TCN

    Reason for Adjustment: [Reason for Adjustment]

    Adjustment Details

    DescriptionOriginal Amount (AED)Revised Amount (AED)
    Goods/Services Description[Original Taxable Amount]
    [Original VAT Amount]
    [Revised Taxable Amount]
    [Revised VAT Amount]

    Additional Information

    If applicable, provide relevant details such as serial numbers of returned goods, reference to agreements for price adjustments, etc.

    Signatory Information

    Name and Designation: [Authorized Person’s Name and Designation]

    This information is for general understanding only and does not constitute tax advice. For specific guidance tailored to your situation, consult with a qualified tax advisor in the UAE.

    Tax for Sending Money to India from UAE

    When sending money from the UAE to India, there are no taxes levied on the transferred amount itself. However, there are some fees and charges.

    Tax Invoice Format UAE Word

    The United Arab Emirates (UAE) was removed from the European Union’s list of non-cooperative jurisdictions for tax purposes in October 2019. This means EU Tax Haven Blacklist UAE it is no longer considered a tax haven by the EU.

    Input Tax Recovery (ITR) is a crucial aspect of Value Added Tax (VAT) in the UAE. It allows registered businesses to reclaim the VAT paid on their purchases, reducing their overall tax burden. Here’s a breakdown of key points:

    Eligibility:

    • You must be a registered business for VAT in the UAE.
    • Your taxable supplies and imports must exceed AED 375,000 per year.
    • You can voluntarily register if your taxable supplies and imports (or taxable expenses) exceed AED 187,500 per year.

    Recoverable Input Tax:

    • You can generally recover the VAT paid on purchases used for making taxable supplies (not exempt supplies).
    • The recoverable portion depends on the type of input tax:
      • Standard-rated input tax: Recover 5% of the purchase price.
      • Zero-rated input tax: Recover the full amount paid.

    Conditions for Recovery:

    • The goods or services must be used for making taxable supplies within the UAE.
    • You must have proper records of purchases and invoices with VAT clearly shown.
    • You must claim the input tax within the prescribed timeframe (usually 4 years).

    Methods of Claiming ITR:

    • Direct deduction: Deduct the recoverable input tax from your output tax (VAT collected on your sales) when filing your VAT return.
    • Refund: If your recoverable input tax exceeds your output tax, you can claim a refund from the Federal Tax Authority (FTA).

    There is no personal income tax in the UAE, including on salaries. This means that employees working in the UAE do not pay any income tax on their salaries.

    UAE Sin Tax

    The UAE levies excise taxes, often referred to as “sin taxes,” on certain goods deemed harmful to society. Here’s what you need to know:

    Types of Products Taxed:

    1. Tobacco products: Cigarettes, cigars, shisha tobacco, etc. (100% tax)
    2. Carbonated beverages: All types of fizzy drinks (50% tax)
    3. Energy drinks: Including taurine-based drinks (100% tax)
    4. Electronic smoking devices and liquids: Includes vaping devices and e-liquids (100% tax)
    5. Sweetened drinks and products: Sugary drinks, candies, chocolates, etc. (50% tax)

    Foreign Tax Identifying Number” (FTIN) doesn’t directly apply in the United Arab Emirates (UAE). Unlike many other countries, the UAE does not issue individual resident or individual non-resident tax identification numbers like Social Security Numbers (SSNs) or Individual Taxpayer Identification Numbers (ITINs).

    The UAE implemented a 50% excise tax on sweetened drinks on December 1, 2019. This tax is often referred to as the “sugar tax” and aims to discourage excessive consumption of sugary beverages and promote healthier choices.

    UAE’s tax landscape is poised for potential adjustments, with factors such as economic performance and global trends influencing the Corporate Income Tax (CIT) rate. The country also plans to expand its tax base, gradually incorporating sectors like extractive industries. Stricter compliance measures are on the horizon, and the UAE aims to negotiate more tax treaties to address double taxation concerns. While the introduction of new taxes like wealth or inheritance taxes is not imminent, it remains a long-term consideration for diversifying government revenue sources. Overall, the UAE is strategically positioning itself to navigate evolving economic landscapes while maintaining fiscal stability and promoting international business relations.

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