On March 7, Law No. (1) from 2024 (“Law”) regarding the taxes for foreign bank that operate in Dubai was promulgated from the Ruler of Dubai His Her Majesty Sheikh Mohammed bin Rashid Al Maktoum. This law is in effect as of the date of announcement in Dubai’s official gazette,, which is on March 8 and will apply to tax periods starting after March 8, 2024. This law repeals Regulation No. (2) in 1996, or any other law that could overturn it. (2) of 1996, or any other law that could contradict it. Law sets out the fundamentals that govern the calculation of tax-deductible income including tax filing and payments as well as the procedures for audits of tax filings and disclosures, as well as obligations and procedures for tax auditing. This blog will discuss the function of corporate tax consultants Dubai, to stay up-to-date on the new law and inform their clients in accordance with the obligations and procedures of tax audits. 

Application to the Law and the Tax Rate 

The Law is applicable on all international banks that operate in Dubai which includes special development zones as well as free zones except for foreign banks that are licensed to operate within Dubai’s Dubai International Financial Centre (“DIFC”). 

Foreign banks will be liable to a tax of 20% on their annual tax-deductible income. Credits will be offered to pay corporate taxes (“CT”) which is due in conformity of Federal Law No. (47) from 2022 (“CT law”) on the taxation of Corporations and Businesses and the amendments thereto, if applicable. 

Calculation of Tax-deductible Income 

The calculation of tax-deductible income is based on (1) the regulations and guidelines endorsed by the Dubai Department of Finance (“DOF”) with regard to exempted income, unrealised profits or losses, headquarters costs and regional expenses and regional expenses, etc. as well as (2) the rules in the CT law, and the corresponding decisions for issues that are not included in DOF’s rules or regulations. DOF for the calculation of tax-deductible income. 

Tax filings and Tax Payments 

The deadline for filing taxes will be set in the DOF. The following documents must be provided at the DOF: 

• Tax return according to the requirements of the DOF 
• Financial statements and related disclosures; 
• Tax amount due and the documentation required 
• Any tax that is paid in compliance with CT law 

Financial statements must be audited. Any report that doesn’t contain all of the above information is rejected. Taxpayers have 30 days to make a voluntary declaration of any tax over or underpaid at the time they are aware of it. The forms and procedures will be provided from the DOF. 

Tax Audit 

The Law outlines obligations and procedures for tax audits, including notifying taxpayers at least five days before the audit and providing a tax audit payoff within 10 working days.  

The Department of Finance (DOF) has 10 days to make an official tax assessment after the audit. 

Taxpayers can object within 20 days of receiving the audit results, with a time limit of five years for audits that can be extended to 15 years for tax avoidance cases. 

Tax Penalties 

In the event of tax evasion taxpayers will be penalized by double the the tax paid. The following are considered as tax evasion 

• Incorrect tax returns being submitted and not submitting an optional declaration within the timeframe; 
• Not paying the tax due as a result of taxes due from Tax audits; 
• The reduction of the value of tax deductible income; 
• Making accounting records fraudulent or providing false or forged financial data; 
• Making use of or causing destruction of any document and documents issued by the DOF; DOF; 
• The destruction or hiding of documents or data that a department or agency must preserve and favor; 
• Obstructing the auditor in performing his duties relating with the audit of taxation; 
• Other acts or omissions that could lead to tax fraud. 

If third parties are found as being involved at any one of the mentioned activities, the same penalty will be imposed on them in isolation. 

Taxpayers will be liable of a 2 percent per month penalty for the late payment of taxes due or the payment of any penalty that is imposed. 

Additionally The Chairperson of the Executive Council of Dubai will decide on any act considered to be violations of the Law and penalties imposed for violators. The amount of penalties to be imposed must not be more than AED 0.5 million. The fine is doubled when there are repeated violations within two years, up to a maximum amount of AED one million. 

Others 

The Director General of the DOF issues resolutions to enforce the requirements of the Law that include regulations, conditions, procedures, controls, timelines, and deadlines. Taxpayers are required to retain their documents for seven years. The regulations from 1996 will apply to tax periods prior to this Law. Additional transitional rules could be established by the Director General. 

Important takeaways and steps to follow 

This new Law in Dubai replaces the prior taxes on banks from abroad. It also permits the credit of tax owed in accordance with the CT law against liability for emirates which will avoid double taxation. It is not clear what the Law will affect the tax period following the 8th of March in 2024. Additional clarifications are expected from the DOF and other Emirates could follow Dubai’s example in the implementation of similar laws. Sharjah has previously announced a similar clause. 

What’s Next?  

As we approach the new tax rules for corporations in Dubai 2024, companies face major changes and difficulties. This underscores the crucial importance of corporate tax advisors in navigating the complicated legal landscape, and in making sure compliance is maintained while maximizing tax savings. Consulting with experienced corporate tax consultants in Dubai is vital for firms to prosper in the current tax climate. 

FAQs 

What are the latest corporate tax rules to be found in Dubai to 2024? 

By 2024 Dubai is implementing a brand new tax system for corporates which imposes an annual uniform rate of 10% for all companies that operate in the Emirates. 

What do you think of the new corporate tax rules for companies operating in Dubai? 

The ramifications of the new tax rules for corporations could result in higher tax obligations for business, heightened tax compliance obligations, as well as the requirement to implement tax-planning strategies to reduce tax burdens. 

What do the new tax rules for corporations affect foreign businesses operating in Dubai? 

Foreign-owned companies that operate in Dubai are also affected by the new corporate tax rate of 10%. rate, which could impact their overall competitiveness and profitability on the market. 

Are there any incentives or exemptions offered under the current corporate tax rules in Dubai? 

Although the new regulations on corporate taxation apply an income tax of 10% for all businesses, certain areas or industries may be suitable for incentives or exemptions according to Dubai government officials. Dubai government. It is recommended for companies to seek out tax experts to consider the various options available to lower their tax obligations.