UAE Corporate Tax: Why UAE free zone businesses must stay on right side of ‘5% of total revenue or Dh5 million’

UAE Corporate Tax: Why UAE free zone businesses must stay on right side of ‘5% of total revenue or Dh5 million’

Dubai: Now that free zone based businesses in the UAE have clarity on what the ‘qualifying income’ should be, their focus should remain steadfast on two numbers when it comes to corporate tax. Through any future tax period, these businesses must at all times satisfy one requirement – that their ‘non-qualifying’ revenues must not exceed the lower of 5 per cent of their total revenue or Dh5 million. (This is known as the ‘de-minimis’ threshold.) If these numbers are breached, the free zone based business will no longer benefit from the 0 per cent corporate tax. For an extended period of 5 years. In fact, they will be treated as a taxable enterprise, with the obligation to pay corporate tax at 9 per cent itself. If their income for the year is over Dh375,000. "The tax rules recognizes the continued importance of free zones to the UAE economy and their tax-related commitments," said Deepak Bansal of AskPankaj Tax Advisors. "The free zone benefits lay special emphasis on tax compliance - and robust accounting - thus making it a key focus area for business owners." In other words, free zone businesses have to at all times fly in lower than the