The United Arab Emirates (UAE) has long been a haven for businesses seeking tax-friendly environments. However, with the recent introduction of corporate income tax (CIT), the landscape has shifted. Here at Highmark, we understand the importance of staying informed and adapting to these changes. This article serves as a guide to help businesses in the UAE navigate the new corporate tax regime.

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Understanding the UAE Corporate Tax Framework

The UAE's corporate tax regime, implemented in June 2023, applies a tiered system to taxable profits of businesses operating in the country. Here's a breakdown of the key points:

• Tax-Free Threshold: Businesses with taxable income up to AED 375,000 are exempt from corporate tax. This exemption offers significant relief for small and medium-sized enterprises (SMEs).
• Standard Tax Rate: A 9% tax rate applies to taxable income exceeding AED 375,000. This rate is considerably lower compared to many other global jurisdictions, maintaining the UAE's attractiveness for businesses.
• Multinationals under Pillar Two: Multinational enterprises (MNEs) that meet specific criteria set by the OECD's Base Erosion and Profit Shifting (BEPS) Project's Pillar Two framework may be subject to a different tax rate. These details are still under development, and it's crucial to stay updated on any forthcoming regulations.

What Does This Mean for Your Business?

The impact of corporate tax on your business will depend on several factors, including your size, industry, and profit margins. Here are some key considerations:

• Tax implications: If your taxable income falls above the AED 375,000 threshold, you will need to factor in the 9% corporate tax into your financial planning and budgeting processes.
• Compliance requirements: The UAE has established a clear framework for corporate tax compliance. Businesses will be required to register for corporate tax, file tax returns, and maintain proper accounting records.
• Strategic planning: Understanding the new tax regime allows you to develop tax-efficient strategies. This could involve optimizing your business structure, exploring available deductions, or restructuring your supply chain.

How Highmark Can Help You Navigate Corporate Tax in the UAE:

At Highmark, we offer a comprehensive suite of services to assist businesses in adapting to the new corporate tax environment:

• Tax planning and advisory: Our team of tax experts can help you understand the implications of corporate tax on your specific business and develop strategies to minimize your tax burden while remaining compliant.
• Tax registration and compliance: We can guide you through the process of registering for corporate tax and ensure you meet all filing and reporting deadlines.
• Accounting and bookkeeping support: We can assist you in maintaining accurate financial records that comply with the new tax regulations.
• Tax audits and representation: In case of a tax audit, our experienced professionals can represent you and ensure your rights are protected.

Moving Forward with Confidence

The introduction of corporate tax in the UAE marks a new chapter for businesses operating in the region. However, this change also presents an opportunity to refine your financial management strategies and ensure long-term success. Highmark is here to partner with you throughout this transition.

By leveraging our expertise in corporate tax, compliance, and financial planning, you can navigate the new landscape with confidence and continue to thrive in the dynamic business environment of the UAE.

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