5 Essential Tax in UAE Every Small Business Owner Should Know
Recently, the UAE implemented specific tax laws. Businesses must understand and follow the rules and regulations for taxes in UAE to prevent fees and penalties for non-compliance.
In light of this, a tax consultancy in the UAE is beneficial to business entrepreneurs as it provides them with informed guidance and support when handling the country’s tax legislation and rules.
So, let’s get into the five significant taxes in the UAE that every business owner must know.
1. Corporate Tax in UAE
In June 2023, the UAE implemented a corporate tax on commercial profits, marking a dramatic policy change. The tax rate is 9% for taxable income over AED 375,000 to maintain financial viability and align with international efforts to address tax avoidance. Revenues below this amount are still tax-exempt to assist startups and small enterprises.
Please Read: 5 Simple Steps To UAE Corporate Tax Registration. Here
2. VAT or Value-Added Tax in UAE
Effective January 2018, various products and services are subject to a standard 5% VAT levy. Several necessary products and amenities are either 0% or exempted to support customer necessities and specific industries like healthcare and education.
Also Read: Step-by-Step Guide to VAT Registration Process for UAE Companies. Here
3. Income Tax in UAE
There is no income tax in the UAE. Since there is no appropriate personal tax in the United Arab Emirates, there is no requirement for an income tax return. The same holds true for UAE residents who work for themselves or as freelancers.
4. Excise Tax in UAE
Certain commodities considered hazardous to the planet or human well-being are subject to this indirect tax. An excise tax has been imposed on tobacco (100%), carbonated beverages (100%), and fizzy drinks (50%) to lower the intake of toxic items. They must also keep accurate records of output, stock levels, and sales and file returns every month.
5. Inheritance Tax in UAE
A federal system does not govern inheritance taxes in the UAE. Nonetheless, the future use of the assets in the event of a death or absence of a will is contingent upon the deceased person’s Muslim faith.
The UAE can use the inheritance rules of the foreign national’s home country instead of those of Muslims. Islamic Sharia law will govern how Muslims split their inheritance.
Final Words
In conclusion, it is notable that the UAE has adopted some business taxes to ensure businesses run smoothly. As the best tax consultancy in the UAE, Paci.ai has an expert team to handle the changing fiscal rules adopted by the UAE and the tax rules for the betterment of business owners. We help you strategically plan your business and remove the worries associated with penalties or fines for late registration and tax avoidance.
Contact us for more information on tax in UAE and how it can be tackled to enhance business operations.
