Unlock the Power of eSignature Lawfulness for Accounting and Tax in UAE

How to eSign a document: eSignature lawfulness for Accounting and Tax in UAE

assalam alaykum welcome to mastering accounting skills today I am bringing for you a perfect easy guide for corporate tax in UAE I will highly recommend you to watch this video till end as this small presentation you will find more productive more informative and more beneficial as compared to any other PID training course on the topic first of all what is corporate tax corporate tax is a form of direct tax that is leved on the annual n income of the businesses it is also sometimes referred to as corporate income tax now first of all we will see how to register for corporate tax and what is the date for filing and paying the corporate tax liability so the first of all the registration so here in UAE the corporate tax regime become effective for financial year starting on or after after 1st June 2023 so all the taxable persons including free zone persons will be required to register for corporate tax and obtain a corporate tax registration number and what is the URL that will be used to uh register online for the corporate tax so here this is the link to register for corporate tax we will also see this link in our browser so let us uh write here text. go. AE okay so when the page is open you click on English if you are know Arabic so you can go for Arabic option also then there is in the services tab you will see registration when you click on registration so it will give you all the eServices for the registration of V corporate tax excise tax or tax agency so all this you will see as you can see here W registration option is there excise text registration D registration all the links are provided here so here you can see also there is an option for corporate tax registration so when you will click on the start button it will take you the page where you can register for corporate taex so here you can see for the new users there is sign up option so this option you will use to create the username when you will click here it will ask you the email your email address your first name last name okay uh mobile number so everything when you will put and you will create a password after that when you will continue it will create for you one account in that account you will login and then there you will add the your text business uh the business name of uh uh which is under uh you uh under your name okay so uh from there you can register for the corporate tax and whatever options they will ask you uh most probably they will ask you about the uh your trade license your Emirates IDs your passport copies and uh uh your um uh memorandum and article of Association of your company and then they will ask you one letter from your bank which will uh show uh that this is your account number your IBN details all the things will be provided there so this these are the basic documents then they they can ask you what is the uh your expenses uh okay and also if you are a big company they will ask you for the audited financial statements uh or if you do not not have the audited financial statements then without audit you can submit the financial statements so uh the more big your organization uh the more documents they will ask you so it depends upon the organization what type of company you are running okay after the registration filing and making the payment for the corporate tax liability taxable persons are required to file a corporate tax return for each tax period within 9 months from the end of the relevant Financial year the same deadlines would generally be apply for the payment of any corporate tax due in respect of the tax period for which the return is filed so now we will see one table which which will uh clearly explain all the things regarding the uh filing of the uh uh corporate tax return and the payment of the corporate tax liability so here as you can see in this table there is financial year the tax period and the last date to file corporate tax return and to make the payment so in the financial year federal tax Authority in UAE they are giving you two options either you can choose your financial year as 1st June to 31st May and the second option is you can choose from 1st Gen to 31st December so if you choose your first year as 1st June to 31st May your tax period will be counted from 1st June 2023 to 31st May 2024 and within 9 months you need to file your vet return and also within this 9 month period you have to pay the corporate tax liability if you have any so the uh last date for this uh tax year First Option it will be 28 February 2025 you need to pay your corporate tax liability for the year 2023 and 2024 then uh in the second option if you have you choose 1st genan to 31st December then your uh First Financial year will start from 1st genan 2024 to 31st December 2024 and within 9 months again you need to file your corporate tax return and also you have to pay the corporate tax liability uh on or before 30th September 2025 next question is what is the corporate tax rate in UAE to answer this question we will go through this table so in UAE a taxable person is categorized into two types the one is resident taxable person the other one is qualifying for free zone person so if you are lying under resident taxable person category so your income up to 375,000 it will be chargeable to tax at 0% and any amount exceeding 375,000 Dam of the taxable income it will be chargeable to corporate tax at 9% uh if you are lying in the second category that is qualifying freeone person then the qualifying income will be chargeable to tax at 0% and the income that does not meet qualifying income uh specification so it will be chargeable to tax at the rate of 9% qualifying income actually includes the income drive from the transactions with other free zone persons as well as the domestic and foreign sourced income from any of the qualifying activities that is specified in the ministerial decision number 139 of 2023 so there are some uh there are also some activities mentioned as excluded activities so any income which is uh coming under the excluding activities that will not be the qualifying income and it will be chargeable to corporate tax at the rate of 9% now we will just go through a simple example to see how the corporate tax calculation will be done so for that uh we have one Excel sheet so here if we uh suppose a company has its income 975,000 okay so how the uh it will be calculated first of all up to 375,000 as we have discussed in the previous slide it will be chargeable to tax at 0% so the tax amount will be zero on 375,000 and any amount exceeding 375,000 that is here in this example 600,000 so it will be chargeable to tax at 9% okay so as you can see this uh at the rate of 9% the tax will be 54,000 so this company tax liability will be 54,000 Dam so the next question is what is withholding tax rate in UAE so withholding tax actually it is the tax that is deducted at source means if you are uh invoicing your customer your customer before for making the payment they will deduct a 9% tax on your invoice so uh in some countries this uh is implemented but in UAE there is no withholding tax um calculation or deduction that's why it will be considered as 0% next slide is very important so what expenses can be deducted from the taxable income so all the business expenses that are used to generate business income are deductible from the tax but there may be some expenses which are of dual nature like some expenses that are used for personal per personal purpose as well as for the business purpose so these expenses uh must be a portion about some of these Dual Purpose expenses UA corporate tax Authority clarifies the deductible amount like entertainment expense 50% of the entertainment expense is allowed to be deducted from the taxable income the expenses that is spent on the entertainment of customers shareholders suppliers and other business partners such as meals accommodation Transportation admission fee facilities and the equipment used for the entertainment of the uh of these business business partners it is allowed to be deducted from the taxable income at uh about 50% amount second is interest expenditure net interest expense is allowed up to 30% of aidda aidda is earning before interest tax depreciation and amortization uh any interest expense which exceeds 30% of ABA may be Carri forward and utilized in the subsequent 10 tax periods third one is uh owners remuneration or salary dividends profit distributions or benefits of similar nature paid to the owner of the company are classified as non-deductible expenses for corporate tax regarding owner salary or monthly salary there are couple of conditions to allow the deduction of the owner salary first of all it is uh it should be clear the need of service is there actually need of these Services of the owner for the company to uh to pay this salary second one is receipt of services the the services for which the owner is hired uh that Services should be actually provided then the third one is market value this is the most important condition uh whereby the salary has to be similar to what a same director or a third party would earn in similar type of organization for the similar type of services now we will see what are the expenses that cannot be deducted from the taxable income so these uh expenses are 100% non-deductible expenditure article 33 of UAE corporate tax law list certain specific expenses for which no deduction will be allowed so one by one we will see number one is any expenditure that is capital in nature means you have spent any money to buy an asset to buy furniture equipment anything else uh which is capital in nature that amount you cannot deduct from the taxable income second is fines and penalties any fines and penalties you paid on the business uh it is also not deductible other than the compensation for damages for breach of the contract then dividends and profits share uh distributed any profit distributed among the owners and uh partners of the business it is also not deductible any bribes and other elicit payments these are also not allowed to deduct from the taxable income donation paid is also not deductible recoverable input vet input vet that you are paying on the expenses on your purchase this uh input vet is recoverable against the output vet so that's why it is not an expense so it is also not allowed to deduct then any non- business expenses means personal expenses which do not have any relation to generate the business income so these personal expens is also not deductible then any other expense as may be specified by the cabinet minister it is also not deductible then any taxes imposed outside the UAE this is also not allowed to deduct that's all for the non-deductible expenditure now we will see the uh next question is where I can find the corporate text law so guys this is the URL where you can find PDF of the corporate text law m.g. AE let's come to this URL and find the pdf version of the corporate text law so the page is m.g. AE press English okay now under policies and legislation you can find corporate tax law there is one link and value edit text also available there click on corporate text in the next page you will find a link to download the pdf version of the corporate text law okay so this is the complete law you can find all the thing things here also you can see a lot of frequently asked questions about the corporate text law this is also very informative section you can get the answers for the question you have in your mind now here in last slide we will see how to prepare yourself for corporate Tex here are some guidelines take a moment and go through all of these guidelines it will really helpful for you [Music] [Music] I hope the knowledge we have discussed in this video will add value to your professional skills also it will be very helpful for you to understanding the corporate text law in UAE subscribe my channel hit the like button and share this video with your friends thank you okay