Can a Tax Group be formed between a UAE-incorporated company and its 100% owned foreign subsidiary managed in the UAE?
Yes, a Tax Group can be formed under certain conditions, but the foreign subsidiary should not be considered a tax resident in its country of incorporation based on the applicable double tax treaty between the UAE and that country. The foreign subsidiary needs to provide evidence that it is only considered a UAE tax resident. This evidence can be from the foreign tax authority or from competent authorities under the double tax treaty.
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Are Free Zone companies in UAE liable to Corporate Tax ?
Free Zone has distinct taxation system based on Qualifying Income and Excluded Income. It is therefore essential to know the kind of income taxable under UAE Corporate Tax Law for Free Zone companies.
Can you Split up your Business to claim Small Business Relief in the UAE?
If your business exceeds the Revenue Threshold limit for Small Business Relief, can you split up your business to claim Small Business Relief as per UAE Corporate Tax Law or will it constitute a Tax Crime punishable under the UAE Tax Procedures Law?
Who is a Taxable Person under UAE Corporate Tax Laws?
Are you a Taxable Person liable for Corporate Tax under the UAE Corporate Tax Law? Can an Exempt Person be considered as a Taxable Person?
Are UAE companies required to mandatorily prepare and maintain audited Financial Statements ?
Can a Tax Group be formed between a UAE-incorporated company and its 100% owned foreign subsidiary managed in the UAE?
UAE companies’ requirement to prepare and maintain audited Financial Statements depends on their status as either a Qualifying Free Zone Company or the amount of their annual revenue. The important points are:
- Qualifying Free Zone Companies are obligated to mandatorily prepare and maintain audited Financial Statements.
- Non-Qualifying Free Zone Companies (Taxable Persons) are required to prepare and maintain audited Financial Statements only if their annual revenue exceeds AED 50 million.
- This means that the obligation to prepare and maintain audited Financial Statements applies to Taxable Persons whose revenue exceeds AED 50 million, provided they are not Qualifying Free Zone Companies.
For instance: If a company’s revenue is AED 49 million and it is not a Qualifying Free Zone Company, it is not required to prepare and maintain audited Financial Statements.
Practical Example:
ABC LLC is a manufacturing company based in Dubai, UAE. They have been in operation for several years and have been actively engaged in the export business within the UAE and to international markets. As the end of the fiscal year approaches, ABC LLC’s management is evaluating its financial reporting requirements and whether they need to prepare and maintain audited Financial Statements in accordance with UAE Corporate Tax Law.
Company Status:
- Revenue: ABC LLC’s total revenue for the fiscal year stands at AED 75 million, indicating significant growth in their business operations.
- Free Zone: ABC LLC doesn’t operates within a Free Zone but is a mainland entity.
Key Questions and Tax Issues:
- Does ABC LLC, with an annual revenue of AED 75 million, have an obligation to prepare and maintain audited Financial Statements?
- Does ABC LLCs non-qualification as a Qualifying Free Zone Company impact its financial reporting obligations?
Solution:
- Revenue Threshold: As per UAE Corporate Tax Law and Ministerial Decision of 82 of 2023 (Concerning Exceptions from Tax Registration), ABC LLC, with an annual revenue of AED 75 million, falls into the category of Taxable Persons whose revenue exceeds AED 50 million. Consequently, the obligation to prepare and maintain audited Financial Statements applies to them.
- Free Zone Status: Since ABC LLC do not meet the specific criteria for being a Qualifying Free Zone Company means that their revenue threshold is still applicable. Therefore, their non-qualification as a Qualifying Free Zone Company does not exempt them from the requirement to prepare and maintain audited Financial Statements due to their revenue exceeding AED 50 million
Conclusion
In this case, ABC LLC, being a Taxable Person, is required to prepare and maintain audited Financial Statements because their annual revenue exceeds AED 50 million, as per UAE Corporate Tax Law and Ministerial Decision.
Are you unsure if your company is required to prepare and maintain Audited Financial Statements? We can help you.
CONTACT US FOR TAX CONSULTANCY
Master UAE Corporate Tax: Explore our course!
Related Content for UAE Corporate Tax
Are Free Zone companies in UAE liable to Corporate Tax ?
Free Zone has distinct taxation system based on Qualifying Income and Excluded Income. It is therefore essential to know the kind of income taxable under UAE Corporate Tax Law for Free Zone companies.
Can you Split up your Business to claim Small Business Relief in the UAE?
If your business exceeds the Revenue Threshold limit for Small Business Relief, can you split up your business to claim Small Business Relief as per UAE Corporate Tax Law or will it constitute a Tax Crime punishable under the UAE Tax Procedures Law?
Who is a Taxable Person under UAE Corporate Tax Laws?
Are you a Taxable Person liable for Corporate Tax under the UAE Corporate Tax Law? Can an Exempt Person be considered as a Taxable Person?