UAE Business Model Flashcards
What is the new corporate tax rate in UAE?
9% effective as of 1June 2023. This is the first time UAE has implemented direct tax.
What is the difference between VAT and Corporate tax?
Corporate tax impact the profitability of the company directly. This is to uplift businesses to int’l std.
What’s the tax rate?
Companies earning under 370k Dirahmwill be tax free. Above is 9% this is a corporate tax and it doesn’t apply to individuals. It’s a federal corporate tax.
How will the companies be taxed?
Taxation will calculated on the adjusted profit of the company which mean that the tax profit and the accounting profits will be different. This will lead to deferred tax assets and liabilities being created as well.
Are individuals affected by this tax?
No for now
Do capital gain income and dividend income received by UAE businesses on its shareholding affect by this tax?
No. most Income earned by holding companies won’t include in Corporate taxation . All thirds segments won’t come under the purview of corporate taxes. Intra group projects and restructuring also won’t include in this scheme.
What are free of corporate taxes?
Certain transactions of free zone companies won’t be taxed as long as they meet certain requirements which is something similar to VAT. Vat transaction by a free zone company only taxed if it’s conducted in the main land. Also taxes paid in the foreign jurisdictions can be deducted towards towards the tax payments in UAE. No withholding tax.
What are the benefits of incorporating your company in the UAE Or moving your company offshore?
Only companies doing businesses in the mainland and companies doing businesses with mainland will be taxable. Free zone companies are exempted from this taxes for now. Free zone continues to be tax free. Simplicity; processes are important. You get a residence permit. if you live in a high tax country, move into UAE. RP gives you the option to move in & out; place for your personal taxes.Banks are reliable. Private wealth, transactional, business and personal accounts, bit more laborious than other places.you don’t have to live there; optionality is important in terms of tax. Inching towards citizenship. Residence permit will be more flexible. Hire people from everywhere; so there is this multicultural vibe. Compared with Malta for instance.
Put the company in your brother’s name?
In some situations Nominee ownership can work, but not a good idea
What is deferred tax asset and liability?
A deferred tax asset is a business tax credit for future taxes, and a deferred tax liability means the business has a tax debt that will need to be paid in the future. You can think of it as paying part of your taxes in advance (deferred tax asset) or paying additional taxes at a future date (deferred tax liability).
What’s capital income?
1-Capital income is the income generated through the possession of wealth, such as rental income, gains from selling an asset, dividend income, certain interest income, proceeds from a life insurance contract, and the share of profits of an investment fund.
Why Tax in UAE?
UAE wants to be a global player and don’t want to be blacklisted by int‘l watchdog FATFwho saysbig companies must pay 15% taxFinancial action task force (FATF) in 2008‘ greylisted Pakistan!Money launderingIn 2018 UAE introduced VAT
What Is GAAP?
Generally Accepted Accounting Principles (GAAP or US GAAP) area collection of commonly-followed accounting rules and standards for financial reporting.
Deferred tax liability
A deferred tax liability is a listing on a company’s balance sheet that records taxes that are owed but are not due to be paid until a future date. The liability is deferred due to a difference in timing between when the tax was accrued and when it is due to be paid.
What Is a Deferred Tax Asset?
A deferred tax asset isan item on a company’s balance sheet that reduces its taxable income in the future. Such a line item asset can be found when a business overpays its taxes. This money will eventually be returned to the business in the form of tax relief.
