UAE Tax Compliance: VAT, Tax & ESR
VAT
All businesses in the UAE need to record their financial transactions and ensure their financial records are up to date.
Mandatory VAT registration - when taxable supplies and imports exceed AED375,000.
Voluntary VAT registration - when taxable supplies and imports reach AED187,500.
New businesses can register voluntarily if their expenses exceed the voluntary registration threshold.
Corporation Tax
Corporate tax is levied at 9% on taxable income exceeding AED375,000, whilst taxable income below this rate is subject to 0% rate. All businesses are required to register for corporation tax, whether or not their taxable income meets the threshold.
New businesses are required to register for corporation tax within three months of their date of incorporation.
Economic Substance Regulations (ESR)
The UAE's Economic Substance Regulations (ESR) require UAE mainland and free zone companies, and certain other business forms, that carry out any of the defined 'Relevant Activities' (listed below), to maintain and demonstrate adequate economic presence in the UAE relative to the activities they undertake, and to comply with notification and return filing obligations.
ESR Relevant Activities
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Banking
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Insurance
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Investment Fund Management
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Lease - Finance
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Headquarters
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Shipping
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Holding Company
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Intellectual Property (IP)
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Distribution and Service Centre.
