UAE CORPORATE TAX: BUSTING MYTHS

Free zones need to work on details to get their corporate tax details right

- BY ATIK MUNSHI Special to Gulf News

Eleven 'myths' seem to have developed around the application of UAE's corporate tax on businesses based in the free zone. It's high time these were dispelled.

■Myth 1: Since we are a company holding a free zone licence, we shall not be attracting any corporate tax.

Fact: The corporate tax is applicable on all type of free zone entities without discriminating on its activities. Entity may have 'exempted income' — or zero rate of corporate tax - provided it is 'qualified free zone person' with 'qualifying income' and satisfies the six conditions laid down by the FTA.

■Myth 2: Being a free zone company in the designated zone in the UAE, we do not require to register for corporate tax. And neither are we required to file corporate tax return.

Fact: A free zone entity is not exempt from corporate tax registration or return filing. All types of free zone licensed entities are required to register timely with FTA and file annual corporate tax returns within 9 months of the tax year end.

■Myth 3: As a trading company in a 'designated free zone' in UAE, we automatically get the benefit of zero rate of corporate tax.

Fact: A free zone entity has to evaluate whether it fulfils the conditions laid down to claim zero rate. Only a qualifying free person can avail the benefit by opting on the corporate tax portal as it is not available by default.