«Federal Taxes»: accounting, consulting and architecture work is subject to it
Personal income from the job or investment is not subject to corporate tax
The corporate tax policy adopted by the state reflects the principles recognized within the best international practices.
The Federal Tax Authority reported that the personal income of natural individuals from "job" or "investment" will not be subject to "corporate tax" scheduled to be applied in the second half of 2023.
In the explanatory guide on Federal Decree-Law No. 47 of 2022 regarding corporate and business tax, the Authority clarified: "Natural persons can achieve income from employment, investments, or from practicing a commercial, industrial, or professional activity, in their personal capacity, through a partnership, or through a sole proprietorship."
"It is not intended that job income and personal investment income are within the scope of corporate tax," it added.
Although the term "business" is defined to include both craft and professional activities, it does not include employment, and the "corporate tax" will not apply to an individual's salary, and to any wages or income from employment.
She pointed out that the terms "business" and "business activity" "define the activities that give rise to an obligation to pay corporate tax by considering a person taxable."
The Federal Tax Authority stated that "business" means "any activity carried out by any legal or natural person anywhere, whether for a continuous period of time, or for a specified period of time. The definition implies that the activity is made for profit and that there is a degree of planning and coordinated effort to conduct the activity."
"The definition also explicitly includes any industrial, commercial, agricultural, artisanal, professional, service, exploration and any other activity of an independent nature related to the use of tangible and intangible property, and this must be interpreted broadly to include any activity related to the development, sale, production, manufacture, exploitation, marketing or distribution of tangible and intangible property."
The authority continued: «The phrase (craftsman) means what is done with skill and handicraft, and the phrase (professional) work in which a skill is used to meet the needs of others, and common examples of professional activities are: accounting, consulting, architecture, and legal services».
It is noteworthy that the Ministry of Finance announced at the end of January 2022 that the UAE will introduce a federal tax on "business" profits, which applies to fiscal years starting from or after the first of June 2023.
At the time, she stated that the corporate tax policy adopted by the state reflects the principles recognized in international best practices.
Registration in the Corporate Tax System is now open
The Federal Tax Authority (FTA) announced the opening of registration for the corporate tax system through the "Emarat Tax" platform for digital tax services, for public shareholding companies and private companies, as of Monday, May 15, 2023, in line with Federal Decree-Law No. (47) of 2022 regarding corporate and business tax (Corporate Tax Law), which stipulates that taxable persons will be subject to corporate tax as of the beginning of the first fiscal year starting on the first of June 2023. Therefore, taxable persons must register and obtain a "tax registration number", for corporate tax purposes.
The Authority called on all taxable public shareholding companies and private companies residing in the UAE for corporate tax purposes to apply for registration with the Authority, explaining that this will not include persons residing in free zones who will be able to register at a later stage.
Abu Dhabi ■ Emirates Today