Taxation of UAE companies depend on whether they are domestic companies or foreign companies. Besides companies, it also covers certain other form of legal person. Let us look at these in detail
Which all Legal persons are covered under UAE Corporate Tax ?
UAE CT will apply to the following categories of legal person : –
- UAE entities : –
- UAE companies ; and
- Other legal persons incorporated in the UAE. This shall include the following :-
- Limited Liability Companies ;
- Private Shareholding Companies ;
- Public Joint Stock Companies ; and
- Other entities that have separate legal personality and are established under the UAE laws .
- Limited liability partnerships, partnerships limited by shares and other types of partnerships, where neither of the partner has unlimited liability for the partnership’s obligations , will be subject to UAE CT as a UAE company.
Further, the rate of taxation of Companies based in UAE is 9% for income in excess of AED 375,000. Also, this is unless the said income is exempt from Corporate tax (For exempt income refer our separate Article).
- Foreign legal entities : –
- Foreign legal entities having a Permanent Establishment in the UAE ; or
- Foreign legal entities which earn UAE sourced income ;
- Foreign legal entities effectively managed and controlled in the UAE . Such companies would be treated as deemed resident of UAE .
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Taxation of Limited and general partnerships and other unincorporated joint ventures and associations of persons ?
Taxation of UAE Companies ( “Domestic entities”) : –
The proposed law will treat limited partnerships, general partnerships, other unincorporated joint ventures, and associations of persons as ‘transparent’ entities. In this scenario, they will not be treated as taxpayers, but their partners or members will be subject to taxation on their income. For example, collective investment funds investors would be covered under these provisions.
UAE Corporate Tax on Foreign unincorporated partnerships : –
For UAE CT purpose, foreign unincorporated partnerships would generally follow the tax treatment of the partnership in the respective foreign jurisdiction.
Also, for more details on taxation of UAE Companies, please refer UAE Corporate Tax Public Consultation Document.
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