The UAE is taking a step forward on June 1 in expanding its revenue base when it introduces corporate tax next month.
The move will increase the country's taxation scope after the introduction of value added tax (VAT) in 2018. There are also duties applied to exports and imports on trade, which add to the government revenue.
The UAE government received Dh75 billion ($20.42 billion) in tax revenue in the fourth quarter of last year, up 29 per cent compared with the same period in the previous year, according to data issued by the Ministry of Finance in March.
However, authorities have clarified that there are no immediate plans to introduce income tax in the country.
Application of VAT in the UAE
VAT is a general consumption tax and is imposed on most goods and services that are bought and sold. It was introduced five years ago at a rate of 5 per cent and is applicable to most goods and services.
The supply of some financial services, residential properties, bare land and local passenger transport are exempt from VAT.
The supply of certain education services and healthcare services, and exports of goods and services to outside the GCC and certain investment-grade precious metals are subject to 0 per cent VAT, according to the Ministry of Finance website.
Tourists visiting the country can also claim a refund of 85 per cent of the VAT paid on goods bought in the UAE before they leave the country.
A business is required to register for VAT if its taxable supplies and imports exceed the notified threshold of Dh375,000.
Corporate tax in the UAE
Corporate tax is a profit-based tax levied on companies with a standard statutory rate of 9 per cent. It is applicable to companies whose income exceeds Dh375,000. Profits below that threshold will be subject to a 0 per cent rate.
There will be no corporate tax levied on salaries or other personal income from employment, be it in the government, semi-governmental entities or the private sector, according to the Ministry of Finance.
Government and government-controlled organisations as well as extractive businesses and non-extractive natural resource businesses that meet set conditions are not required to register under the tax law.
Other exemptions are available to organisations such as pension or investment funds and public benefit organisations.
Small businesses in the UAE with a revenue of Dh3 million or less can also benefit from a new corporate tax relief programme.
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Have you been targeted?
Tuan Phan of SimplyFI.org lists five signs you have been mis-sold to:
1. Your pension fund has been placed inside an offshore insurance wrapper with a hefty upfront commission.
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3. You have also been sold investment funds with an upfront initial charge of around 5 per cent. ETFs, for example, have no upfront charges.
4. The adviser charges a 1 per cent charge for managing your assets. They are being paid for doing nothing. They have already claimed massive amounts in hidden upfront commission.
5. Total annual management cost for your pension account is 2 per cent or more, including platform, underlying fund and advice charges.
What is blockchain?
Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.
The main difference between blockchain and other forms of DLT is the way data is stored as ‘blocks’ – new transactions are added to the existing ‘chain’ of past transactions, hence the name ‘blockchain’. It is impossible to delete or modify information on the chain due to the replication of blocks across various locations.
Blockchain is mostly associated with cryptocurrency Bitcoin. Due to the inability to tamper with transactions, advocates say this makes the currency more secure and safer than traditional systems. It is maintained by a network of people referred to as ‘miners’, who receive rewards for solving complex mathematical equations that enable transactions to go through.
However, one of the major problems that has come to light has been the presence of illicit material buried in the Bitcoin blockchain, linking it to the dark web.
Other blockchain platforms can offer things like smart contracts, which are automatically implemented when specific conditions from all interested parties are reached, cutting the time involved and the risk of mistakes. Another use could be storing medical records, as patients can be confident their information cannot be changed. The technology can also be used in supply chains, voting and has the potential to used for storing property records.
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