A layman’s curiosity about compliance with UAE Corporate Tax….

Jo: OK. Now I know what is corporate tax and to whom it applies… and I’ve told you that my company make way more than AED 375k in a year. So now what must I do? Like, register or something for Corporate Tax?

“Didn’t you already register for VAT?” … says Gerry with a fatherly smile.

Jo: You should know! You got me registered…. And I got that number … what d’ ya call it? TRN or something?

Gerry: Yup, that’s what I wanted to tell ya. Chances are that your existing TRN will work for Corporate Tax registration as well. But, yes, I believe you will need to registered for Corporate Tax with the same TRN. Otherwise, how will FTA know that you have understood the law and you are going to comply with it.

Jo, (secretively murmurs to Gerry): What if I kept silent? How bad is it? Can I get away with it?

Gerry: Don’t even think about it bro. This is UAE! These people are well organized. Like, really well organized! You do this and you’ll be in big trouble. Do you know what are the penalties imposed for not registering to pay your corporate tax in Saudi and Oman and Qatar and Kuwait? It’s terrifying. And FTA has a state of the art ERP and CRM at play here. You really think they will not pay attention to your VAT returns? You already told them about the dirham value of your sales and purchases man. Are you serious?

Jo: Hey, cool down man. I was just asking. Just wanted to know what will happen to those who ignore this new law. I won’t even think about this…. this … crime! You crazy?

Gerry: You’d better not! If it’s any consolation, you could have an impact assessment done for Jo & Folks LLC.

Jo: What will you do in that impact assessment?

Gerry: Well, you have your audited, or even unaudited, financial statements for 2021, right?

Jo: Yeah

Gerry: We’ll focus on the Income Statement. First, we’ll see …:

  1. The make up your incomes: whether you have sale of goods or services and how much?
  2. How much of those are in mainland, designated zones, exports to other GCC countries, and non-GCC countries?
  3. Are there any exempt incomes like dividends or sale of securities, etc?
  4. Out of your total expenses how much will be allowed as admissible deductions and how much will be not claimable and go wasted?
  5. We’ll estimate tax depreciation, and instead of accounting depreciation, we’ll consider tax depreciation.
  6. We’ll take out all expenses that are booked by way of provisions such as provision for bad debts, provision for utilities, etc, and instead consider actual expenses incurred such actual bad debts, actual utility expenses, etc.

Only after that, we’ll be able to see the net taxable income figure. If it is more than AED 375k you better register for Corporate Tax. Else not. Comprende?

Jo: You make it sound so easy!

Gerry: Or It could be Heineken’s doing!

Both: Hahahaha

Disclaimer:

The use of complex legalese language is intentionally avoided in the text herein above to captivate attention and interest of the common layman reader. This LinkedIn article does not comprehensively cover the contents of the provisions laid out in the legal framework of the jurisdiction in question and is likely to present personal opinions of the Author, which may be wrong or technically misleading, in spite of Author’s bona fide intentions to share knowledge through this Article, free of charge to general public, and for which the Author has not received any remuneration from any party. Please use your own discretion before relying on the contents herein above. The Author or any party associated with him do not accept any responsibility for any actions taken on the basis of this LinkedIn article.