Chapter 1: The UAE Tax & Compliance Journey | UAE Corporate Tax Masterclass — Transcript

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1. 0:00Welcome everyone to the first  chapter of UAE corporate tax series.
2. 0:04In first chapter we are going to discuss certain  basic terminologies and why UAE came up with the
3. 0:12tax concepts and compliance concept and  how the country is making regulations.
4. 0:20we'll make sure that we are touching  upon certain other compliances which
5. 0:25are applicable in UAE. Before starting the video  uh let me give you few uh advance notifications.
6. 0:34First thing please do not consider the lectures  what we are discussing as a tax advisory. It is
7. 0:42purely for educational purpose. If you have any  particular questions where you required a sort
8. 0:49of tax advisory or a tax opinion you can reach  out to me. Second thing throughout the series
9. 0:56when I'm discussing I'm going to refer certain  article numbers, the cabinet decision numbers,
10. 1:02ministerial decision numbers, FTA guides  public clarification. All these things I'm
11. 1:07going to discuss you don't need to memorize the  numbers when I'm talking about articles or when
12. 1:13I'm talking about the decision numbers .But if  you want to feel more confident while talking to
13. 1:19your clients or talking to your colleagues you  there is nothing wrong. You can like you know
14. 1:24remember the key decision numbers that will  give you more confident when you are talking.
15. 1:31Third thing uh after the video I'm going to put  every video I'm going to put three questions in
16. 1:38the comment box just to uh like you know  understand the level of understanding you
17. 1:44uh had throughout the lecture and uh please make  sure that you are answering there is nothing wrong
18. 1:51nothing to judge whatever you understood be it  right or wrong you can uh put it in the comment
19. 1:57and uh any uh corrections required or of course  I'm also going to put at the end what is the
20. 2:04uh right answer and why it is right answer. So  let's let's start first let's start with uh why
21. 2:12UAE came up with uh taxes like if you know before  2017 there were no taxes in UAE 2017 is the year
22. 2:22UAE brought uh excess tax which is applicable for  certain products. Before that there were no taxes.
23. 2:31First why UAE came up with taxation? This is the  question we are going to answer. Not only UAE,
24. 2:37GCC countries were highly dependent on the uh  oil oil money and of course the visionary leaders
25. 2:45of UAE and other GCC countries they decided  that we need to move from the oil wealth to
26. 2:52a knowledgebased uh economy and UAE promoting a  lot of tourism and other activities construction
27. 3:01attracting investors into UAE. As part of this, UA  started shifting their focus uh from the uh income
28. 3:09generated from oil and gas to different different  segments. This is one thing. Second thing,
29. 3:16uh UAE want to match the country to international  uh regulation level. Of course, when a country
30. 3:26has no taxes, no compliances, there are other  countries who are having this regulations. they
31. 3:33those countries will be very hesitant to deal  with countries who has less compliances or there
32. 3:40there is no taxes. If the country is a tax heaven  country, the foreign countries will be hesitant to
33. 3:46deal with that country. There are many examples  for that. This is the second reason and UAE want
34. 3:53to stop multinational entities coming into the  country and just moving their profit from high
35. 4:01tax country to low tax countries. This is a very  common scenario that multinational entities are
36. 4:08coming to a country where there is less taxes  or no taxes and having their setup there and
37. 4:14move their profit from high tax country to the  country where there is less taxes. There are many
38. 4:21other reasons as well but at the end UAE came  up with uh corporate tax and many other taxes.
39. 4:29Now the question is why 9%age tax in UAE? Before  understanding why 9% we need to discuss about a
40. 4:41particular scenario or a particular organization  which is called OECD. OECD is a you can consider
41. 4:48it as a community of countries. The full form of  OECD is organization of economic cooperation and
42. 4:55development. There are 140 plus countries are  following OECD frameworks. Many concepts OECD
43. 5:04brought example the concept of transfer pricing  pillar to so many things are there which we
44. 5:09will discuss uh all this uh aspect of OECD  because UAE itself following OECD framework.
45. 5:19Now OECD has a regulation that any country who  is following OECD framework they have to bring
46. 5:27compliance they have to bring uh taxation and  OECD is recommending a minimum tax at 9%age
47. 5:38any country who is following OECD framework they  have to bring a minimum tax of 9%age now that is
48. 5:44the reason UA chose the lowest rate which OECD is  recommending 9% percentage. Why 9%age? Obviously,
49. 5:51the country want to uh like you know attract more  investors while having the compliances in place.
50. 5:59So that's the primary thing uh UA is focusing and  UA chose the 9%age taxes. 2018 is the year UAE
51. 6:09become officially part of OECD that they started  following the OECD framework and there are other
52. 6:17countries also if you see like I will give few  example to you a country like Hungary Hungary
53. 6:23is having a taxation of 9%age which is uh same  like UAE and country like Bulgaria Bulgaria is
54. 6:33having 10%age taxation Qatar which is nearby GCC  country. Qatar is having uh like 10%age taxation
55. 6:42right now on the foreignowned entities and uh  we have Cyprus 12.5%age and we have uh Ireland
56. 6:5712.5%age. Now these are countries who  are following OECD framework and these
57. 7:03are some of the countries who are following  low tax rates comparing to other countries.
58. 7:09If you see all these countries, UA has gone for  a lowest rate of taxes. Uh of course Hungary is
59. 7:16there which is matching with UAE tax rate. Now  let's discuss on UAE compliance journey where
60. 7:26it is started and where we are reach uh where  we have reached at this point of time. Just
61. 7:32to give a road map of entire compliance 2017 is  the year UA came up with the excess tax. Excess
62. 7:42tax is the first tax came in UAE and it got  implemented with effect from 1st October 20
63. 7:5017 1st October 2017. What is excess tax?  Excess tax is applicable to certain goods
64. 7:58which are harmful to the human being or to  the nature. Now obviously they they identified
65. 8:04certain products. One is uh tobacco products.  Second one is uh uh let's say energy drinks
66. 8:19and sweetened drinks
67. 8:26and they fix like you know if this  products are consumed inside UAE and
68. 8:31uh the consumers are going to pay taxes tobacco  products have 100%age excess tax applicable able
69. 8:39energy drinks have 100%age excess tax applicable  sweetened drinks in the year 2026 starting of 21st
70. 8:48January 2026 the authority changed the regulation  that the companies will pay the excess tax or the
71. 8:56consumers will pay the excess tax based on  the sugar content in the uh products like if
72. 9:03it is a artificial sweetener or it can be added  sugar based on that there is a formula And we
73. 9:08need to work out how much will be the excess tax  applicable for per liter of sweet and drinks. Now
74. 9:16this is a glimpse of excess tax. Followed with  that 2018 uh UA came up with value added tax.
75. 9:30I have a very bad handwriting. Hope you don't  mind. And the date of implementation of ex
76. 9:37uh value added tax was 11 2018. Now value added  tax many countries it's called GST or sales tax
77. 9:46different names are there ultimately it is like  you know based on the goods consumption or service
78. 9:51consumption the customers are paying the tax.  UAE has a 5%age value added tax for most of
79. 10:00the goods and services uh like you know supplied  inside UAE. Now any company or any business who
80. 10:09are exporting any services th those are taxed  at 0%age. There are certain services which are
81. 10:17considered as exempt uh from the UAV VAT and  even certain services or goods inside UAE if
82. 10:26you supplied those are also falling under 0%age.  I'll give you a few examples. Educational industry
83. 10:34even though they are providing the service  inside UAE they are going to charge 0% VAT.
84. 10:41uh 99%age purity gold which is going  to have a 0%age VAT and uh residential
85. 10:53accommodation
86. 10:58first supplier
87. 11:02they are going to have 0%age VAT so certain  products and services even if it is supplied
88. 11:08within UAE also it is going going to be taxed  at five uh 0%. Now in 2018 one more regulation
89. 11:17came which is AML CFT regulations which is  anti-moneyaundering that is the main thing
90. 11:25of course the counterfeiting of finance of  terrorism that is AML CFT this regulation
91. 11:33itself as it is named it is to stop uh the  in inside the country the moneyaundering
92. 11:40activities that is the whole idea UAE  When the law is introduced, of course,
93. 11:46the law is introduced on 30th October  2018. And when the law got introduced,
94. 11:53the authority made a particular category and  that category is called DNFBP. What is DNFBP?
95. 12:02Certain businesses that certain businesses  uh let me write it properly. DNFBP DNFBP is a
96. 12:13certain business activities which is designated  non-financial business and profession certain
97. 12:20businesses which are designated and they have  to strongly comply with the anti-moneyaundering
98. 12:26uh regulations they have initially the authority  classified four categories one is real estate
99. 12:32brokers I'll tell you why all these uh four uh  activities came came into the AML regulation.
100. 12:40Second one was jewelry and precious metal trading  and third one is corporate service provider
101. 12:54and finally accounting and audit firm.
102. 13:03Why these businesses are particularly under  the AML uh regulation? First of all, these are
103. 13:09the industries where customers can use for doing  money laundering. Anyone who has illicit money or
104. 13:16illegal money, the easy way of converting it into  a legitimate way is buying real estate. And anyone
105. 13:24who has bulk money, they can convert that money  into jewelry or precious metal. And uh corporate
106. 13:30service provider are the people who are generally  helping to others to uh set up the companies. So
107. 13:37people can come open fake companies, open bank  account, transfer the funds to UAE. That's how
108. 13:43uh the corporate service provider are in  the scope. And who knows all these things
109. 13:49ultimately the entities or the service providers  who are providing accounting and audit service.
110. 13:56What is this four entities or four businesses  obligation under AML and CFT law? See first of
111. 14:04all the government has no doubt on this business.  Please don't take that way that oh the real estate
112. 14:11industry government is highly monitoring because  the brokers are doing something wrong. No what the
113. 14:16authority want while you are dealing with your  client. If you find that any of your client is
114. 14:22using your business for money laundering purpose  inform to us. Just inform rest of the things we
115. 14:29will take care. The same thing when you if you  feel like someone who is coming with the bag of
116. 14:33cash to a jewelry and telling that I want to  buy jewelry there is something suspicious the
117. 14:40authority is telling that if you find something  suspicious report to us. This is the whole idea of
118. 14:45uh AML regulations in UAE applicable for DNFBP. So  these are the four categories. Now next it was in
119. 14:562019 the authority came with a regulation called  economic substance regulation which is ESR and
120. 15:03the law got introduced on 30th April 2019. By the  way the economic substance regulation is already
121. 15:12cancelled in UAE. When we are discussing more on  corporate tax I will explain to you while uh like
122. 15:18why UA canled economic substance regulation.  Economic substance regulation is nothing but
123. 15:25the whole concept is that if someone is setting  up a business in UAE that should not be a shell
124. 15:31company. This is a very simple layman explanation.  Now if that company want to prove that we are not
125. 15:39a shell company what they need to do of course  they need to economically present in the country.
126. 15:45That is the whole idea. How they can prove that  we are economically present in the country? They
127. 15:50need to prove that they have adequate employees in  the country. They need to have they have adequate
128. 15:55assets in the country or capital expenditure.  They are spending uh operating expenditure for
129. 16:01the business inside UAE and their decisions are  taken the major decisions are taken from UAE.
130. 16:08All these things together we can call that this  business is present in UI and every business
131. 16:16have to prove it to the authority that yes uh we  are just not a shell company we are having our
132. 16:24adequate presence inside the country. That was  the whole idea of economic substance regulation
133. 16:30and this regulation got cancelled with effect from  11 2024 and the reason is that the law came when
134. 16:38UA had no corporate tax and the law got abolished  when UA brought the taxation. Now UA has taxes for
135. 16:47business then there is no point like you know  to prove that you are economically present or
136. 16:52not. But yes the concept of substance what we  are discussing here the presence it will come
137. 16:58again when we are discussing more on corporate  tax especially when we discuss on the free zone
138. 17:04matters we will discuss it later. 2020 is the  year UA came up with the regulation called UBO
139. 17:14which is ultimate beneficial ownership and  this regulation came on 24th August 2020.
140. 17:22What is ultimate beneficial ownership regulation  is dealing that any business who like anyone who
141. 17:29is setting up a business in UAE, they have to  economically or sorry that is ESR regulation.
142. 17:36Any business who are setting up in UAE, they need  to provide the details of ultimate beneficial
143. 17:43owner. Who is the real owner of this company?  I will give an example to you. Someone who is
144. 17:48setting up a company in UAE and in that company  100%age shares are owned by a UK company. When we
145. 17:55are seeing who is the owner of UK company then  we are finding there is a Australian company.
146. 18:01Who is the owner of the Australian company? We  are finding one Indian company. Who is the owner
147. 18:06of the Indian company? We are seeing Mr. A. Now  for UA company, who is the ultimate beneficial
148. 18:13owner? Ultimate beneficial owner of UA company  is Mr. A this has to be disclosed who is the
149. 18:21real individual who is behind the business which  is set up in UA. This is the regulation and it is
150. 18:28still still applicable. Anyone who want to set up  a business in UAE they have to disclose who is the
151. 18:34ultimate beneficial owner. Not only to set up the  business in if someone want to open a bank account
152. 18:39all these scenarios they have to disclose that who  is the ultimate beneficial owner of the company.
153. 18:472023 is the year UAE introduced corporate tax
154. 18:55and corporate tax is implemented with effect from  1st June 2023. Now throughout this series we are
155. 19:03going to talk about corporate tax just I'm giving  you the compliance road map. So I will not discuss
156. 19:10much about corporate tax because the entire series  we are going to discuss on corporate tax only.
157. 19:162025 is the year UAE implemented pillar 2  regulations. What is pillar two? Of course,
158. 19:28when we are talking pillar two, is there any  pillar one? Yes, there is pillar one also,
159. 19:33pillar two also. Let me take a step back and go  back to the uh community of the countries which we
160. 19:40discussed which is OECD. OECD as we discussed it's  a uh group of countries 140 plus countries are
161. 19:47following the uh OECD framework and the concept  of pillar one and pillar two came from the OECD
162. 19:55now pillar one which is not practically applicable  in today's world but I'll just tell you like what
163. 20:02what pillar 2 is dealing pillar two is dealing  with very big giants of business those who are
164. 20:09making more than 20 billion euro annual revenue  in a year. They are coming under the regulation
165. 20:17of pillar one and as per pillar one each country  how to tax this business when they are operating
166. 20:24in multiple countries how each country should tax  this thing. This is what pillar one is dealing
167. 20:30since it is not in practice. Let's not uh keep  it aside. That is not the case when it comes to
168. 20:37pillar two. Pillar 2 is already a real concept and  even in UAE pillar 2 regulations are applicable
169. 20:46and the pillar 2 regulations are applicable with  effect from 11 2025. What pillar 2 is telling?
170. 20:54Pillar two is telling that if you have a business  in UAE first you identify is your business is
171. 21:00considered as multinational entity or M& if the  answer is yes then you will come under the pillar
172. 21:072 regulation and instead of uh 9%age corporate  tax which is applicable in UAE such companies are
173. 21:15going to pay 15%age corporate tax now the question  is like who is considered as M& is every company
174. 21:24or is considered a seminary? The answer is no. To  fi find out whether a company is a multinational
175. 21:30entity or not, we need to see two conditions.  First thing, operating in more than one country.
176. 21:40If a company uh has a head office in  Dubai and they have a branches in Sharah,
177. 21:45Abu Dhabi or Russell Khima that doesn't  mean that companies falling under the
178. 21:51definition of multinational entity.  There should be a global structure.
179. 21:58Example the parent companies in UK and uh they  have a subsidiary in UAE. They have a branch
180. 22:05in India. they have uh like a joint venture in in  US then we can say like this company is operating
181. 22:13in more than one country. Second condition  their global revenue or global turnover is
182. 22:22more than 750 million euro in a year. If  these two conditions are satisfied then
183. 22:29they considered as multinational entities and  multinational entities are going to pay 15%age
184. 22:37taxes in the country where they are operating and  UAE came up with a particular cabinet decision
185. 22:44only for this and the cabinet decision was  published in the year 2024 and the cabinet
186. 22:52decision number is 142 of 2024. 4 142 of 2024.  Cabinet decision. What is cabinet decision? We
187. 23:02are going to discuss in the next chapter. Just  to give an idea, this is the cabinet decision
188. 23:09published which is relating to the uh pillar  to taxation. Now we are in the year 2026. 2026
189. 23:20is the year UA has a big shift. that is UA  is moving from paper invoice to e invoice.
190. 23:32What is e- invoice? Right now what is happening  a company they are making uh the invoice and
191. 23:37they are converting it into PDF or like you know  image format whatever they are sharing it with
192. 23:42the client and getting it paid and at the year  end they are going to report their VAT or they
193. 23:48are going to report uh the corporate tax just  the figures authority doesn't know what really
194. 23:55happening in every business until they come for  an audit but once the invoicing is introduced
195. 24:02produced. Of course, it is going to introduce with  effect from 1 7 2026 and they they made it like in
196. 24:13two phases. Phase one for business who are making  more than 50 million dhams. Phase two it is for
197. 24:20less than 50 million dhams. It's a entire separate  topic just to give an idea in the current year in
198. 24:29which we are sitting 2026 UA is taking this  step to migrate to e invoicing thing. Now any
199. 24:36business who are making invoice it is going to  be realtime reported to the tax authority. It's
200. 24:42not like the authority uh doesn't know what is  happening. Before your customer get your invoices,
201. 24:48the authority is going to get a copy and  UA is following a particular system called
202. 24:53five corner model. It is very complicated.  If you want to know more about invoicing,
203. 24:59I have done a particular video only on invoicing,  you can uh watch it in the same channel. Now let
204. 25:08me give you a bit understanding on taxes. Now  this is the entire road map from excess tax to
205. 25:16e invoicing from 2017 till 2026. Before getting  into corporate tax things, first let's understand
206. 25:27direct tax and indirect tax. What is direct tax?  What is indirect tax? These are the two taxes
207. 25:35uh applicable around the globe. If you class,  if you want to classify the tax system into
208. 25:40divide into two, one will be direct tax and one  will be indirect tax. If you see excess tax,
209. 25:51VAT, these are the taxes coming under the
210. 25:56definition of indirect tax.  Direct tax is corporate tax,
211. 26:04income tax. These are the taxes which are coming  under the definition of direct tax. Now what is
212. 26:11the uh difference between direct tax and indirect  tax? It's very simple. You think of a situation.
213. 26:18By the way, UA has no income tax at the moment.  UA told like personal incomes are not subject to
214. 26:24taxes which we will discuss. Uh we we have a  separate video for uh personal income. Uh why
215. 26:32it is not taxed? What are all the incomes included  in that? We'll discuss that. Think of a situation.
216. 26:40You are paying income tax. Now you are paying the  income tax or corporate tax out of the profit or
217. 26:49income. Correct? If you are paying income tax or  corporate tax, you are paying out of your pocket.
218. 27:01Right? That means you are paying directly to the  tax authority. That is why it's called direct tax.
219. 27:09Whereas if you are going to a shop buying some  products, you are paying 5%age to the shopkeeper
220. 27:19not to the tax authority. Now who is paying this  to the tax authority? The shopkeeper is paying
221. 27:24to the tax authority. If you are going to a shop  buying some energy drink you are already the the
222. 27:31price what you are paying it's already including  the excess tax. Being a taxpayer you are not
223. 27:39paying directly to the authority. That's why it's  called indirect tax. That means you are paying
224. 27:45the taxes but not directly to the tax authority.  You are paying it through the service provider or
225. 27:52the seller. versus if it is a corporate tax or  income tax you are identifying how much profit
226. 27:58you earn or how much income you earn and you are  calculating the taxes and you are directly paying
227. 28:03to the tax authority. So this is the difference  between direct tax and indirect tax and most of
228. 28:11you must be already aware that UAE has a corporate  tax which is 9% which is right which is correct I
229. 28:21agree 100%age I agree but if you see more in depth  you can understand that UA tax rate is not 9%age
230. 28:30I always prefer to say UAE tax rate is from 0%  percentage to 15%age. We will discuss like uh
231. 28:39who all are coming under the 0% why it is between  0 to 50%age. You will understand it. First of all,
232. 28:47who is paying 0%age taxes? Certain companies  or certain businesses are still paying 0%age
233. 28:54taxes. Who all are paying 0%age taxes? Business  who are making profit below 80 375,000 dhams they
234. 29:08are going to pay 0%age tax. Second category uh  any company who make a revenue not the profit
235. 29:19revenue below 80 3 million drums they are going to  pay no taxes and the authority has come up with a
236. 29:33relief for small business it's called small  business relief in short form we call it SBR
237. 29:41This SBR the small business relief is available  till 2026 December 31. So 2024 or 2023 when
238. 29:53the taxes came uh 23 24 25 26 4 years we can  practically say this 4 years if a company who
239. 30:02makes below 3 million drums the authority told  you are not going to pay any taxes. This is the
240. 30:08second category who are making uh who are not who  are paying no taxes or 0%age taxes. Now the third
241. 30:17category of uh uh people who are paying 0%age tax  is freezone companies who are eligible for 0%age.
242. 30:29Certain free zone businesses are eligible for  0%age taxes. We will have at least five chapters
243. 30:36exclusively on free zone to understand what are  all the conditions for a free zone company to
244. 30:42get a 0%age tax. U there are a lot of things I  don't want to get into that just to give get an
245. 30:49understanding our topic is like why UA tax is  not always 9%. Fourth category of business who
246. 30:58are going to pay zero tax or no tax is called  exempt person. So certain business or certain
247. 31:06people are exempted from UA corporate tax. They  are not going to pay any taxes. Example government
248. 31:14uh government controlled entities uh there  there are certain business who are into
249. 31:19extraction of natural resources. Why extraction  of natural resources is not paying taxes in UAE?
250. 31:25The reason is that they are already subject for a  different taxation called emirate level taxation.
251. 31:32That is why the authority excluded extraction  business from UA corporate tax. So in short ex
252. 31:40again whatever we are discussing we are going to  discuss again. So if anything you are not getting
253. 31:45uh don't get uh like you know don't think it  is too complicated whatever we are discussing
254. 31:50today we are going to discuss very detail.  Exempt person are not going to pay any taxes
255. 31:57in UA. So this will give an idea that there  are certain businesses who are going to pay
256. 32:05zero tax or no tax. Now who is going to pay  9%age? 9%age tax will be paid by the business
257. 32:19who makes profit
258. 32:26above 30075,000 dhams. Now even if someone  who is making u 375,000 dhams above profit
259. 32:36is there all profit is taxed? No. I'll I'll  give an example to you. Let's say there is
260. 32:42a company who made 500,000 dham profit. How  their taxes will be? Their first 375,000 dham
261. 32:51tax will be sorry income will be taxed  at 0%. And how much is the difference?
262. 32:58125,000 dhams. This will be taxed at 9%.  How much is 9% of 125,000 dhams? It will be
263. 33:14let me calculate is 11,000 250 11,250 is the tax  a business is going to pay who made 500,000 dham
264. 33:27profit. Now if you see how much is the effective  tax rate tax rate they are paying which is 11,250
265. 33:35divided by 500,000 dhams. So 11,250 dhams they  are paying taxes against 500,000 profit they have
266. 33:45generated and what is the actual percentage of  taxes they are paying? They are paying 2.25%age.
267. 33:55Is it 9%age? No. So the effective  tax rate is below 9%age.
268. 34:02Any company I I'm telling this to you very  very uh frankly no company will pay exact
269. 34:109%age either it will be always below 9%age  because why there is always a 375,000 which
270. 34:19is taxed at 0% or not taxed. Now the third  category of business who are going to pay
271. 34:2515%age taxes. Who is going to pay 15%age taxes?  We already discussed M&As are going to pay 15%age
272. 34:33tax. Who we we already discussed who is M& uh  the multinational entities who are operating
273. 34:39in more than one country and globally they  are earning a revenue more than 750 million
274. 34:45euro then they are considered as M& and  they will come under the 15%age taxation.
275. 34:57Now do you agree that UAE not has not like you  know always 9% taxes that's why I told you it
276. 35:04is always between 0 to 15%age you can genuinely  have a question like when you are telling 0 to
277. 35:1215% will it be 15%age for M&S or will it be  uh 375,000 dham anyway 0%age tax rate. When
278. 35:22it comes to pillar to taxation, there is no  300,000 75,000 dham threshold. 15%age is the
279. 35:29effective tax rate on all the profit. Of course,  the profit is calculated in a different method.
280. 35:34It's a very complicated thing. But effectively,  it will be 15%. So, there is no 375,000 durhams
281. 35:41exemption available when it comes to pillar  to taxation. Let's see corporate tax journey.
282. 36:00What was the road map of UA corporate tax? First  January 2022, UA authority announced that yes,
283. 36:09corporate tax is going to be implemented in UAE.  That was the first announcement. Followed with
284. 36:16that in April 2022 UAE authority published a  document called public consultation. Now it's
285. 36:26a usual thing in UAE any particular law when they  introduce they uh publish a document called public
286. 36:34consultation and the purpose of this public  consultation is to get the opinion from public
287. 36:40that public and professionals that this is what  we are going to implement what is your opinion and
288. 36:47people can comment people can their uh like you  know opinion on that particular regulation and the
289. 36:53authorities of course they are going to consider  the public opinion opinion before they uh publish
290. 36:59the uh the the relevant law April 2022 the public  consultation document and public consultation
291. 37:09document is not a law even today I hear that free  zone company who are getting income from outside
292. 37:18UAE they are going to pay 0%age taxes this is  coming from public consultation when the public
293. 37:25consultation was done or published. It was written  in the public consultation that the free zone
294. 37:31company who are making income outside from outside  UAE will be taxed at 0%age which got changed when
295. 37:38the actual tax law came uh which uh come up with  a lot of condition stages and all these things.
296. 37:50December 2022 is the year corporate tax law  published. December 2022 and exact date of
297. 38:03uh publication is 9th December 2022 and  corporate tax law got implemented from
298. 38:13June 2023 which is 1st June 2023. So January  2022 the law the authority announced that the
299. 38:24corporate tax law is coming. April 2022 the  public consultation uh document published
300. 38:30and 9th December 2022 the tax law published  which got with effect from 1st June 2023.
301. 38:42Now I'll give you one interesting factor  on the factor 9. What it is like a three
302. 38:50interesting factors about number nine. First  thing UAE announced the corporate tax law on
303. 38:589th December and what is the tax rate not the  effective tax rate announced by UAE which is
304. 39:079%age and one more thing once like a financial  year or tax year is ended example if a company's
305. 39:19tax year is ending on 31st December 2025 Five  when they should file the tax return. Once the
306. 39:26year is finished the authority told you need  to do the filings in 9 months. So there are
307. 39:32three nine factors for easy to remember. The  law got published on 9th December. 9%age is
308. 39:39the tax rate and 9 months is the given time to  submit the tax return and make the tax payment.
309. 39:48Next let's discuss like  who all are the authorities
310. 39:54involved in the corporate tax. There are  mainly two authorities. First authority
311. 40:00is called ministry of finance. We can call  ministry of finance. Ministry of finance is
312. 40:12the authority who are law makers. They are  making the law. They make the legislations.
313. 40:20They make the decisions. They are the  lawmakers. Now another authority which
314. 40:28is federal tax authority which we can  call FDA. They are the law executors.
315. 40:43So whatever the law announced or made by the  ministry of finance, federal tax authority is
316. 40:49going to execute that law. So these are the  two main authorities. We often discuss about
317. 40:54ministry of finance. We often discuss about  FDA during the entire entire session what we
318. 40:59are going to have. Now just let me give you a  quick summary what we have discussed. We are
319. 41:05coming to an end of today's session. What we have  discussed so far? We discussed started with why
320. 41:13UA came up with taxation. We discussed UA wanted  to move from the uh oil oil money to uh like you
321. 41:21know different revenue generating streams like  tourism, construction and of course taxes and
322. 41:28uh UAE want to match the country standard with  in global standard and UAE don't want a situation
323. 41:36that foreign companies are shifting their profit  to UAE and UA become part of an organization
324. 41:43called organization of economic cooperation and  development in the year 2018. The lowest rate
325. 41:52which OECD is recommending is 9%. We discussed  few countries who are having the lower uh tax
326. 41:58rates uh comparing to the globe. Then we discussed  a compliance road map in UAE. October 2017 is the
327. 42:05year excess tax introduced applicable for certain  products which are harmful. 2018 January 1st value
328. 42:11added tax got introduced. 5 percentage is the  standard value added tax rate in UAE which is
329. 42:17applicable for most of the goods and services  and 2018 is the year anti-moneyaundering law
330. 42:24came into the picture s the authority made certain  particular category of business which is called
331. 42:30designated non-financial business and profession  and uh it it is real estate broker jewelers and
332. 42:37precious metal trading corporate service provider  and accounting and audit firm why they are in this
333. 42:43and that we have already discussed. 2019 is the  year economic substance regulation came which
334. 42:51got abolished with the from 1st January 2024. The  concept of economic substance regulation is that
335. 42:58the uh business which are operating inside UAE  should have adequate presence inside the country.
336. 43:052020 ultimate beneficial ownership regulation  came. Anyone who is setting up a business,
337. 43:10they have to maintain a register of who  is the ultimate beneficial owner and they
338. 43:16have to disclose to the authority if it  is a corporate structure who is the real
339. 43:21person behind the business. 2023 corporate tax  got introduced with effect from 1st June 2023.
340. 43:272025 pillar 2 got implemented cabinet decision  number 142 of 2024 and it told that uh any
341. 43:35business who are part of multinational entity  they have to pay minimum 15%age corporate tax
342. 43:41and who is multinational entity those business  who are operating in more than one country and
343. 43:46having a global turnover of um 750 million  in durhams it can be 3.15 billion a roughly
344. 43:58and 2026 in the current year UA is migrating  to the e invoicing which we discussed what is
345. 44:04invoicing. Further we discuss what is the two type  of taxes direct tax and indirect tax. Why it is
346. 44:10corporate tax is direct tax because the taxpayer  is paying tax directly to the authority versus VAT
347. 44:16and excess tax. Taxpayer is the consumer and the  consumer is not paying directly to the authority.
348. 44:23They are paying it through their supply chain.  And we discussed UA has the tax rate which is
349. 44:319 percentage but it is not always 9 percentage.  We discussed it is between 0 to 15%age. Who is
350. 44:38getting 0%age? Any business who is making profit  below 375,000 and uh any business until 2026 who
351. 44:45made annual revenue below 3 million drums they are  eligible for small business relief. And freezone
352. 44:51companies subject to the condition they can get  0%age taxes. And there are certain exempt person
353. 44:58which are we discussed few examples government  controlled and uh extractive natural business
354. 45:03they are get they are considered as exempt  person. Again going further we discussed
355. 45:10u even if a company who is paying 9% taxes they  are not effectively paying 9% because always
356. 45:18their first 375,000 dham is taxed at 0%. We made  a sample calculation with great difficult now we
357. 45:28discussed further about the corporate tax law  journey in UAE. Corporate tax announced in UA
358. 45:34in January 2022. The public consultation document  announced in or published in April 2022. The tax
359. 45:42law got published uh on 9th December 2022  which is with effect from 1st June 2023.
360. 45:51We discussed a factor of nine that the 9th  December is the date the tax law got announced
361. 45:56and 9th percentage is the tax rate and the tax  filing need to be done and the payment need to
362. 46:02be done within 9 months after the tax year ended.  We touched upon the authorities who are involved
363. 46:09in the tax regulation which is ministry of finance  uh who are the lawmakers and federal tax authority
364. 46:15who are the law executors. Now we'll see in the  next chapter what we are going to uh discuss in
365. 46:23the next chapter. I'll just give an idea. We  are going to discuss about corporate tax law.
366. 46:29Who make the law? What is the law is talking?  And we are going to discuss cabinet decision
367. 46:37which we can short form called CD. We we  will discuss about ministerial decision.
368. 46:48which we'll call MD then  uh FDA public clarification
369. 47:01then FDA guides. These are the primary documents  available in the entire tax law. How these
370. 47:09documents are connected each other? Which order  you need to read when you have some doubts. This
371. 47:15is what and what is the role of each authority?  Who is the cabinet? Who is the minister and what
372. 47:21is FDA's role? This is what we are going to  discuss on the next chapter. And as I told in
373. 47:27the starting I'm going to post three questions in  the comment box. Make sure that you are answering
374. 47:33uh and I will of course after certain time I will  come back and reply with the correct answer. I'm
375. 47:38sure most of you will answer correctly. See  you in the next chapter. Till then, bye-bye.