Is every income of a trading company subject to Corporate Tax in the UAE?

Is every income of a trading company subject to Corporate Tax in the UAE?

The application of corporate tax on the juridical trading companies depends upon their location and status of their customers

File photo used for illustrative purpose only

By Mahar Afzal Published: Sun 13 Aug 2023, 10:39 PM

The corporate tax law (the law) in the UAE applies to trading companies, unless they qualify for exemptions or operate as natural persons with an annual income below one million dirhams. These trading companies can be categorised as either resident trading companies or nonresident trading companies.

The resident trading companies include (i) the juridical trading companies incorporated in the UAE, including the companies registered in the free zones, (ii) the juridical trading companies established out of the UAE but controlled and managed from the UAE, (iii) any sole establishment, and civil companies who conduct a trading business or business activity in the UAE. The non-resident trading companies comprise (i) the permanent establishment (PE) of the non-resident trading company in the UAE, (ii) UAE-sourced income of the non-resident trading companies, and (iii) nexus in the UAE of the non-resident trading companies to drive UAE-sourced income. Based on these criteria, all limited liabilities trading companies, public shareholding trading companies, public joint stock trading companies, sole establishments, civil companies etc. involved