UAE Corporate Tax: Companies need to exercise caution with their "branch" licenses

MoMansour - | UAE

The specifics of a company's branch licenses will be especially crucial. Businesses in the UAE should register their corporate taxes with 100% transparency as a general guideline. in particular with regard to the licenses they possess.

While the world celebrates the start of a new year, companies that follow the January to December fiscal year will move into the corporation tax era. Though their company tax returns aren't due until September 2025, there are a few things that are worth quickly going over.

The tax registration will serve as proof that the people or businesses are legitimate taxpayers. The authorities promote prompt registration, and the online registration process is easy to complete. The authorities would then have enough time to examine the applications and offer comments.

The business tax registration uses Emaratax technology to duplicate the data previously supplied for Value Added Tax (VAT). In light of my experience, a prompt application will assist in locating the gaps in VAT registrations and related data that have previously gone undetected. Before the business tax registration is accepted, these holes must be filled, which could take some time.

Categories of licenses

The owners and their auditors may also be taken aback by the licensing categories that businesses have been operating under for a long time. A UAE company's branches are merely an extension of its primary head office license, particularly when they are located in different emirates.

It is not necessary for these branches to have their own registration. Companies routinely change their names to include "branch" in order to secure more licenses. Licenses that fall under a category other than "branch" and are linked to the primary license run the danger of being regarded as distinct businesses.

Businesses operating under various sole establishment or civil company licenses across emirates, particularly under distinct VAT registrations, would confront a mirror problem.

If a firm, like a salon or grocery store, fails to accurately identify the category of its permits, it may also lose its eligibility for small business relief (SBR)—especially if the same management, financial resources, and bank account are used.

Is the corporation planning to close in 2024?

It appears that business owners are reluctant to file for corporation tax. It is frequently funny when someone resists an eventuality. Owners who intend to dissolve their businesses in 2024 appear to be under the impression that they can evade registration.

The business would still be required to register, file a corporate tax return for the shortened fiscal year, and eventually de-register from corporate tax. There could be consequences for any delays, including for the attorneys.

The economic department and free zone authorities could request corporate tax clearance prior to authorizing liquidation, given the coordination amongst the various tax agencies.

Benefits of free zones taxes

A zero percent preferential tax rate on profits from trading eligible commodities was recently extended to commodity traders operating out of free zones, which are not considered "designated zones."

The topic of trade enterprises located in "designated zones" is still up for dispute. Are these businesses qualified to receive the special tax rate on "high-sea sales" and on direct or third-port shipments?

The points made by each side of the argument are equally valid. It is still unclear if the location of the company or the items should determine the "distribution of goods in or from a designated zone."

I've seen a lot of individuals argue that third-port shipments need to be qualified for the preferred rate by citing the second public consultation document (PCD). If this is the case, the PCD also recommended dividing a manufacturer's revenue into income from distribution and income from manufacturing.

When it comes to public consultation documents, depending only on them might not be the best course of action. Free zone businesses involved in different qualifying activities must also navigate the inclusions and exclusions within the specific qualifying activity's scope.

Sufficient material

In order to receive tax benefits from free zones, enterprises must maintain sufficient operations within the designated free zone. It can take a lot of restructuring to achieve the necessary substantive requirements.

It's common to establish resolutions for the upcoming year, but these generally fall through in a matter of weeks or months. Plans for the upcoming tax era shouldn't be flimsy. Penalties and lost possibilities for tax optimization could arise from any gaps.

Business owners should inquire about it, and the information would be available to plan for any potential tax ramifications.

About Author

MoMansour
MoMansour
63 Total posts


Read Also

UAE
UAE warn of fines of up to Dh100,000 for the unlawful use of prescribed medications

Authorities in the United Arab Emirates have issued a warning that individuals who illegally use authorized pharmaceuticals might face fines of up to 100,000 dirhams.

UAE
‏Urgent.. The Prime Minister announces the new ministers in the UAE government

Today, Sunday, Sheikh Mohammed bin Rashid Al Maktoum, Vice President of the UAE, Prime Minister and Ruler of Dubai, announced the new formation of the UAE government.

UAE
Mohre announces the facilitation of work permit procedures in the UAE when issued or cancelled

The Ministry of Human Resources and Emiratisation announced the facilitation of work permit procedures when issued or cancelled.

UAE
Dubai Airport announces new restrictions on passengers

Dubai Airport authorities announced some restrictions for non-travelers in July and August.

UAE
Companies in the UAE provide alternative systems for end-of-service compensation

Various alternate methods of end-of-service compensation are offered by businesses in the United Arab Emirates.

UAE
New important instructions for passengers traveling through Dubai airports

Travelers in a hurry to leave Dubai are advised to complete immigration 1.5 hours in advance of departure.

UAE
FTA announces the imposition of a fine of 10 thousand dirhams in the UAE due to taxes

It has been announced by the FTA that a fine of ten thousand dirhams will be imposed in the United Arab Emirates due to taxation.

UAE
The Meteorological Authority announces the date of rain in the UAE during the coming days and weeks

The dates of the upcoming rainy days and weeks in the Emirates are announced by the Meteorological Authority.

UAE
Mohre announces paid holiday for employees in the UAE

Mohre has stated that employees in the UAE will receive paid vacation time.

UAE
Expo Dubai gives families the chance to win a summer vacation in 7 destinations

During Expo Dubai, families have the opportunity to win a summer trip to one of seven different locations.

UAE
Dubai Mall Introduces Paid Parking from July 1 with Salik Boards Near Entrances

Boards displaying the distinctive grey and white Salik branding have recently appeared at various entrances of Dubai Mall, signaling the imminent introduction of paid parking for visitors.

UAE
The UAE authorities announced the evacuation of residents from a residential tower in Sharjah

It was stated by the authorities in the United Arab Emirates that the occupants of a residential tower in Sharjah would be evacuated.

UAE
Dubai announces plan to add 32 new metro stations by 2030

Dubai's Metro service is set to significantly expand in the coming years following the approval of a development plan by the emirate's Executive Council.

UAE
Dubai Targets $177bn FDI by 2033 with Major Metro Area Developments

Dubai has set an ambitious target to attract AED650 billion ($177 billion) in foreign direct investment (FDI) by 2033, supported by the Dubai Executive Council.

UAE
UAE announces 5-Year Penalty for Revealing Work Secrets

The Criminal Information Center (Wa'i) of the UAE's Public Prosecution recently brought attention to the consequences of sharing confidential company information on social media, with the undercurrent of "Work secrets are trust."

UAE
Dubai seized 1,274 drug shipments last year, including heroin, meth & marijuana

Dubai Customs reported 1,273 seizures of illicit drugs at land, sea, and air ports across the emirate as part of efforts commemorating the International Day Against Drug Abuse and Illicit Trafficking.

UAE
A new fuel prices in the UAE for the month of July.. Changes in taxi prices

The UAE has recently implemented new fuel tariffs for the month of July. The prices of taxis have been adjusted.

UAE
UAE Petrol Prices Decline Once More for July 2024

The UAE has announced a reduction in petrol prices for July 2024, marking the second consecutive month of price decreases across the country.

UAE
UAE Takes Action Against Counterfeit Goods with 620 Violations Recorded in 2023

Since the beginning of 2023 through the first half of the year, the UAE's Ministry of Economy has conducted 4,444 inspection tours across local markets. These efforts target cases of commercial fraud, imitation, and trademark counterfeiting,...

UAE
UAE Sets 6 New Rules from Fines to Paid Parking, Changes Effective July

As we approach the midpoint of 2024, the UAE has been abuzz with significant developments that are set to impact daily life and financial planning across the Emirates.

UAE
New fees and fines will be imposed on UAE residents starting July 1

There are six new restrictions that will take effect in July, ranging from paid parking to new fines in the UAE.

UAE
The UAE authorities announced the amendment of the system of paid parking fees in several areas

It was declared by the authorities in the UAE that they would be changing the system of paid parking fees in a number of different regions.

UAE
The UAE warns of hail and rain in some areas and issues an orange alert

This morning, the National Center of Meteorology in the United Arab Emirates issued an orange alert regarding the weather conditions in the UAE. The center warned of rain in some eastern regions, in addition to the presence of dusty conditions...

UAE
UAE police arrested Hundreds in overnight crackdown on cybercrime syndicates

In a sweeping overnight initiative across the UAE, significant cybercrime networks were disrupted, marking a pivotal moment in law enforcement's ongoing battle against digital crime.

UAE
UAE: Four New Mosques on Famous Square Corners Wow Residents

Sharjah has constructed four new mosques with traditional Islamic styles that really reflect Arab culture and Islam.

UAE
Dubai schools top global rankings in financial literacy and creative thinking

Dubai’s private schools have once again affirmed their global standing by achieving impressive rankings in financial literacy and creative thinking in the 2022 Programme for International Student Assessment (PISA), conducted by the Organisation for...

UAE
UAE: Ministry of Foreign Affairs issued a warning to travelers to 6 countries

The Ministry of Foreign Affairs of the United Arab Emirates issued a caution to travelers to six other nations.

UAE
Sharjah Summer Sale: 75% Discounts and Gold Prizes Starting July 1 in UAE

On July 1, Sharjah's much awaited massive summer sale returns promise for large bargains, spectacular events, and raffle prizes of Dh3 million.

The UAE determines the procedures for obtaining free hotel accommodation in Abo Dhabi with a transit visa