Highlights on Tax Advantages in UAE: Conditions for the Businesses to Qualify for the 0% Rate
The UAE has been known for its extravagant development and the premium amenities that it provides to individuals. The businesses around the globe make efforts to establish their businesses in the UAE to enjoy the world-class facilities and create a global identity for the businesses. The facilities and charm of the UAE are not only limited to its infrastructure and development but also expand to the policies and regulations devised by the authorities. One such attractive policy is the CT regime, which has been introduced lately in the UAE in 2023. Multiple entities can take advantage of the 0% CT rate, but they must be aware of the conditions that are to be met. The scenario where the 0% tax rate is applicable is explained in the blog.
All about the 0% Tax Threshold Under The CT Regime
The CT rate of 9% is generally applicable for the entities who are eligible to be registered under the regime. This also includes the entities that are established and located in the free zones. The entities in the freezone if meet the certain criteria as for being eligible for Qualifying Freezone Person, then they can enjoy the 0% CT rate. Further, there are some specific instances where the entities would be eligible for the 0% tax rate.
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Key Highlights of the 0% Corporate Tax Rate
In this section, we can discuss the key highlights of the 0% corporate tax rate:
Income from the Rendering of Services by a Headquarters:
In instances where a headquarters provides any kind of service to the related parties, then the income from such service is eligible for the 0% tax rate. The services provided by the headquarters include administering services, overseeing service, management of the business activities of the concerned related parties, business planning and any development or risk management services, coordination of the group activities, etc., along with any other supporting services rendered to the related parties.
Ensuring the Maintenance of Adequate Substance:
The QFZP are required to ensure if they maintain the required adequate substance to be eligible for the 0% CT rate. As a part of the compliance requirement and to furnish the maintenance of the adequate substance, the QFZP is required to conduct the core income-generating activities, along with maintaining the full-time employees with physical offices and assets and liabilities with required income and expenses in the UAE.
Trade of Qualifying Commodities:
For the QFZP, any income that is generated from the trade of the qualifying commodities, which include metals, minerals, energy, or any kind of agricultural commodities being traded on a commodities exchange market within the UAE or overseas, that is recognized by the authorities with the non-freezone entities might also be eligible for the 0% CT rate.
The above are some of the instances specifically focused on the QFZP, who are eligible for the 0% tax rate. The business entities planning to establish their businesses in the UAE can take this great advantage, and the established businesses can also focus on meeting the conditions to get the benefits of the 0% CT.
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CDA: Your Perfect Tax Partner
CDA’s premium tax services provided by the experienced team can enhance the compliance framework of the businesses. Our team has an absolute understanding of the new regime and its implications for the businesses, enabling them to formulate effective strategies. Our experts can assist you in getting the reliefs, exemptions, and applicable deductions facilitating low tax payments and compliances. We have the best team who are on standby to solve your UAE corporate tax complexities and help you to level up the business in the competitive market of UAE.
To explore more about our services, contact CDA team now.
